Oliver Hart, a Jewish-American professor of economics at Harvard University, shared the Nobel Prize in economics.
The prize was awarded to Hart and Bengt Holmstrom of Finland, a professor of economics and management at the Massachusetts Institute of Technology, on Monday for their work on contract theory, which studies how contracts allow people to deal with conflicting interests.
Hart, 68, did his Nobel-winning work in the 1980s, according to The Royal Swedish Academy of Sciences, which awards the prize. Holmstrom was recognized for his work in the 1970s.
According to the Academy, "Oliver Hart 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.
Hart is the son of Philip D’Arcy Hart, a leading British medical researcher and pioneer in tuberculosis treatment who died 10 years ago at the age of 106. He is descended from a prominent London Jewish family, including his great-grandfather, an Orthodox Jew named Samuel Montagu, who was a member of the House of Commons for 15 years until 1900 and then received a peerage, becoming the first Baron Swaythling. Hart’s mother is Dr. Ruth Meyer, a gynecologist.
His wife, Rita Goldberg, is a Harvard literature professor who wrote the second-generation Holocaust memoir “Motherland: Growing Up With the Holocaust.”
Hart and Holmstrom will split the prize of 8 million kronor, or $924,000.
JTA contributed to this report.