Economics Professor Oliver Hart of Harvard University, who is Jewish, has won this year’s Nobel Prize in Economics together with Bengt Holmstrom of Finland, with whom he worked together on contract theory: the concept of how contracts enable people to deal with conflicting interests.
Hart did his award-winning work in the 1980s; Holmstrom was recognized for his work on the subject a decade earlier.
Hart’s mother is a gynecologist; his father was a leading British medical researcher and pioneer in the field of tuberculosis treatment. The son of a prominent Jewish family from London, Hart’s great-grandfather, Samuel Montague, was an Orthodox Jew who was a member of the House of Commons for 15 years. Montague then received a peerage, and became the first Baron Swaythling.
Hart’s wife is Harvard Professor Rita Goldberg, author of the second-generation Holocaust memoir, “Motherland: Growing Up With the Holocaust.”
The Royal Swedish Academy of Sciences which awards the prize wrote that Hart, 68, “made fundamental contributions to a new branch of contract theory that deals with the important case of incomplete contracts. Because it is impossible for a contract to specify every eventuality, this branch of the theory spells out optimal allocations of control rights: which party to the contract should be entitled to make decisions in which circumstances?
“Hart’s findings on incomplete contracts have shed new light on the ownership and control of businesses and have had a vast impact on several fields of economics, as well as political science and law. His research provides us with new theoretical tools for studying questions such as which kinds of companies should merge, the proper mix of debt and equity financing, and when institutions such as schools or prisons ought to be privately or publicly owned,” the Academy wrote.