, Columnist
An Economics Nobel for Examining Reality
The award used to go to economists with broad theories. Now, those who use the equivalent of a microscope are winning.
Gee, thanks.
Photographer: Scott Eisen/Getty ImagesThis article is for subscribers only.
This year’s economics Nobel Prize has gone to Oliver Hart and Bengt Holmström, for their work on the theory of contracts. For good primers on the winners and their work, check out the blog of economist Kevin Bryan, several posts by the always-reliable Marginal Revolution, and the summary written by Bloomberg View’s Tyler Cowen.
The research here is deep microeconomic stuff. It’s about incentives, and imperfect information, and long-term relationships. It’s about delicate strategic interactions between people who don’t know each other’s capabilities or intentions. But it’s related to lots of real-world economic issues -- performance pay, mergers and acquisitions, bank lending and corporate structure.