Oliver Hart, a co-winner of this year’s Nobel Prize in Economics, has been a key participant in Harvard Law School’s program in law and economics for 25 years.
Hart, who is the Andrew E. Furer Professor of Economics at Harvard University, has co-led the Research Seminar in Law, Economics and Organization at HLS, together with HLS faculty. In that setting, Hart has presented many of the papers on contract theory for which he shares the Nobel Prize with MIT economist Bengt Holmström. The seminar has been a major forum for the development of scholarship in the field.
In a press release, the Royal Swedish Academy of Sciences said Hart received the award for his “fundamental contributions to a new branch of contract theory that deals with the important case of incomplete contracts, which 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.”
Hart’s longstanding co-teachers and participants in the Research Seminar include Harvard Law Professors Lucian Bebchuk, Louis Kaplow, Steven Shavell and Kathryn Spier.
In describing the contributions of Hart and Holmström to contract theory, the Nobel committee noted that work published separately and independently in 1979 by Holmström and Shavell, the Samuel R. Rosenthal Professor of Law and Economics at Harvard Law School, demonstrated that an “optimal contract should link payment to all outcomes that can potentially provide information about actions that have been taken.”
“Oliver Hart has been at the center of the advancement of Law and Economics at HLS and, more broadly, in the legal academy, during his entire time at Harvard. Indeed, he has served as president of the American Law and Economics Association,” said Bebchuk, Kaplow, Shavell and Spier in a joint statement. “His work on contracts, and organizations more broadly, is at the center of modern scholarship in the field, with important implications for corporate law, bankruptcy, financial regulation, and much more.
“We are delighted to congratulate our colleague Oliver Hart for his brilliant and important work on the economics of incomplete contracts, stressing the advantages of assigning residual rights of control in an efficient manner.”
Read more about Hart’s Nobel Prize and the reaction at Harvard University in the Harvard Gazette.