WASHINGTON – The Latest on the Nobel prize in economics (all times local):
Harvard economist Oliver Hart says he’s “thrilled” his work has received one of the highest honours of his profession.
“It’s a recognition that your work has been valuable. That’s what we all want,” he said at a news conference Monday at the university’s economics department.
“I can’t deny that the thought had crossed my mind that I might win it. But I could not imagine the phone actually ringing,” Hart said later in an interview with the AP.
David Laibson, a former student of Hart’s who now chair of Harvard’s economics department, calls Hart’s work “foundational” and praises him as a wonderful colleague, friend and mentor.
Nobel Laureate and fellow Harvard economist Eric Maskin said that Hart’s theory of “incomplete contracts” is critical to “the understanding of how productive assets are used in a modern economy.” He also noted that Hart has made significant contributions in other areas of economic theory, including the notion of an “optimal contract” and the nature of corporate takeovers and the stock market.
Several hours after getting the call notifying him that he had won the Nobel Prize, Massachusetts Institute of Technology economist Bengt Holmstrom says he is still dazed, overwhelmed, and wondering whether he was in a dream.
Displaying some of what MIT President L. Rafael Reif called his “world-class sense of humour,” Holmstrom says during a news conference at MIT that “I am still wondering whether I will wake up or not, or whether this is the real thing.”
The Finnish-born economist shared the Nobel with British-born Oliver Hart of Harvard University for their research on contract theory, including CEO compensation.
He did not have an opinion, however, on whether CEO pay has become excessive, but said he does understand how it causes what he called “trouble.”
Another Nobel winner praised the decision to hand the economics prize to Harvard University’s Oliver Hart and the Massachusetts Institute of Technology’s Bengt Holmstrom for their work on the economics of contracts.
“This is the Nobel Prize in economics at its best,” George Akerlof of Georgetown University, who won the prize in 2001, told The Associated Press by email. “The character of both Bengt and Oliver shines through in their work and their character: they are true intellectuals and truly great people.”
Akerlof is married to Federal Reserve Chair Janet Yellen.
Oliver Hart of Harvard University and Bengt Holmstrom of the Massachusetts Institute of Technology have been so influential for so long that their Nobel prize in economics Monday came as no surprise to other economists. They have done groundbreaking work on the best ways to design contracts.
Paul Krugman, a newspaper columnist and economist who won the Nobel himself in 2008, tweeted: “Hart and Holmstrom so obviously deserving that my first thought was ‘didn’t they have it already?’ “
Pennsylvania State University economist Ran Shorrer, who taught contract theory as a graduate student at Harvard, says Hart and Holmstrom have had a huge influence on the way corporations decide to pay executives.
He says that “any modern compensation scheme is informed by their work.”
He describes Hart as “very polite. Very British… He’s a great guy. He is a very senior guy, but he is very generous with his time.”