Warwick alumnus awarded Nobel Prize for Economics

The Nobel Prize in Economics 2016 was presented to Warwick alumnus Professor Oliver Hart yesterday for his work on Contract Theory.

Professor Hart graduated from Warwick with a M.A in Economics in 1972, and is currently the Andrew E. Furer Professor of Economics at Harvard University. He has also received an honorary degree in Doctor of Laws from Warwick in 2012, and is an honorary Professor in Warwick’s Department of Economics.

He returned to the University in 2012 to receive his honorary Doctor in Laws. In an interview at the time, he encouraged Warwick graduates to not just follow the crowd: “Be courageous… If your heart tells you another direction is interesting.”

With their work on Contract Theory, Professor Hart and his colleague Professor Bengt R. Holström, who is also jointly receiving the Nobel Prize, have opened up a new field of economic research that has been greatly beneficial to designing policies and institutions in areas including property rights and bankruptcy legislation.

Contract Theory is the study of how economic actors can create contracts and policies given incomplete information, and is closely linked to law as well as economic policy.

Professor Hart graduated from Warwick with a M.A in Economics in 1972, and is currently the Andrew E. Furer Professor of Economics at Harvard University.

One of his key contributions is in the area of incomplete contracts. His work on awarding decision rights in place of paying for performance has shed light on some of the big questions in economics, such as public and private ownership and company mergers.

Professors Hart and Holström will share the 8 million krona (£740,000) prize. First instituted in 1968, The Nobel Prize in Economics has often helped winners bring their findings closer to policy making.

Previous awardees of the prize include prominent economists Milton Friedman, Paul Krugman and Friedrich August von Hayek.

Other economists have agreed that the Hart-Holström prize is well-deserved. Upon hearing the announcement, Paul Krugman, the 2008 laureate, tweeted his first thought: “Didn’t they have it already?”. University of Michigan’s Professor Justin Wolfers called the prize “long overdue”.

Prof Abhinay Muthoo, Department of Economics, also commented: “I am absolutely delighted by the news of the award of the 2016 Nobel Prize in Economics to Oliver Hart, for his outstanding scholarship, most notably, for his path-breaking work on the role and allocation of power in economic relationships.”