2016 Nobel Economics Prize Winner Oliver Simon d'Arcy-Hart was born on 9th October 1948 at Hampstead in London, England.

2016 Nobel Economics Prize Winner

A former undergraduate at King’s College (1966), and a former Fellow of Churchill College, was jointly awarded the 2016 Sveriges Riksbank Prize in Economic Sciences, along with Bengt Holmström of MIT for their work in the field of contracts. Professor Hart became the 96th Cambridge affiliate to be awarded a Nobel Prize after the Nobel Prize in Physics went to Cambridge alumni David Thouless (Trinity Hall, 1952), Duncan Haldane (Christ’s, 1970) and Michael Kosterlitz (Gonville and Caius, 1962).

The Nobel Assembly made their announcement on 10 October 2016, stating: “Modern economies are held together by innumerable contracts. The new theoretical tools created by Hart and Holmström are valuable to the understanding of real-life contracts and institutions, as well as potential pitfalls in contract design. "Society’s many contractual relationships include those between shareholders and top executive management, an insurance company and car owners, or a public authority and its suppliers. As such relationships typically entail conflicts of interest, contracts must be properly designed to ensure that the parties take mutually beneficial decisions.

"This year’s laureates have developed contract theory, a comprehensive framework for analysing many diverse issues in contractual design, like performance-based pay for top executives, deductibles and co-pays in insurance, and the privatisation of public-sector activities."

Professor Hart is currently the Andrew E. Furer Professor of Economics at Harvard University. From 1975 to 1981, Hart was an Assistant Lecturer and then Lecturer at the Faculty of Economics, and a Fellow of Churchill College. He gained his PhD from Princeton University in 1974.

In the mid-1980s, 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.

Family

Oliver Hart was born in Hampstead, London, England to Philip d'Arcy Hart, a famous seminal medical researcher from Great Britain, and Ruth Mayer, gynaecologist. Both his parents were Jewish, while his father was a member of prominent noble Jewish family Montagu—Oliver's grand-grandfather was Samuel Montagu, 1st Baron Swaythling.

He is married to writer Rita B. Goldberg, a Harvard literature professor and author of the second-generation Holocaust memoir “Motherland: Growing Up With the Holocaust.”

They have two sons and two grandsons.

Education and Associations

Hart earned his B.A. in mathematics at King's College, Cambridge, in 1969 (where his contemporaries included the former Bank of England Governor Mervyn King), his M.A. in economics at University of Warwick in 1972, and his Ph.D. in economics at Princeton University in 1974. He then became a fellow at Churchill College, Cambridge, and a professor at the London School of Economics. In 1984, he returned to the U.S., where he taught at the Massachusetts Institute of Technology and, since 1993, at Harvard University. He was chairman of the Harvard economics department from 2000 to 2003. He is a fellow of the American Academy of Arts and Sciences, of the Econometric Society, of the American Finance Association, a corresponding fellow of the British Academy, and a member of the National Academy of Sciences. He has been president of the American Law and Economics Association and vice president of the American Economic Association, and has several honorary degrees.

Academics

Hart is an expert on contract theory, theory of the firm, corporate finance, and law and economics. His research centers on the roles that ownership structure and contractual arrangements play in the governance and boundaries of corporations. He has used his theoretical work on firms in two legal cases as a government expert (Black and Decker v. U.S.A. and WFC Holdings Corp. (Wells Fargo) v. U.S.A.).

Books

Firms, Contracts, and Financial Structure (Oxford University Press, 1995).

Selected articles

"On the Optimality of Equilibrium when the Market Structure is Incomplete", Journal of Economic Theory, December 1975, 418-443 "Takeover Bids, the Free-rider problem, and the Theory of the Corporation" (with Sanford J. Grossman), Bell Journal of Economics, Spring 1980, 42-64 "An Analysis of the Principal–Agent Problem" (with Sanford J. Grossman), Econometrica (January 1983) 7-46. "The Market Mechanism as an Incentive Scheme," Bell Journal of Economics, 14 (Autumn 1983) 366-82. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration" (with Sanford J. Grossman), Journal of Political Economy, August 1986, 691-719. "One Share-One vote and the Market for Corporate Control" (with Sanford J. Grossman), Journal of Financial Economics, 1988 "Incomplete Contracts and Renegotiation" (with John Hardman Moore), Econometrica 56(4) (July 1988). "Property Rights and the Nature of the Firm" (with John Hardman Moore), Journal of Political Economy 98(6) (1990). " A Theory of Debt Based on the Inalienability of Human Capital " (with John Hardman Moore), Quarterly Journal of Economics, November 1994, 841-879 "The Proper Scope of Government: Theory and an Application to Prisons" (with Andrei Shleifer and Robert W. Vishny), Quarterly Journal of Economics 112(4) (1997) 1126-61. "Contracts as Reference Points" (with John Hardman Moore), Quarterly Journal of Economics, February, 2008,1-48.