The Nobel Prize in Economics has been announced, and what a deserving prize it is: Bengt Holmstrom and Oliver Hart have won for the theory of contracts. The name of this research weblog is “A Fine Theorem”, and it would be hard to find two economists whose work is more likely to elicit such a description! Both are incredibly deserving; more than five years ago on this site, I discussed how crazy it was that Holmstrom had yet to win!. The only shock is the combination: a more natural prize would have been Holmstrom with Paul Milgrom and Robert Wilson for modern applied mechanism design, and Oliver Hart with John Moore and Sandy Grossman for the theory of the firm. The contributions of Holmstrom and Hart are so vast that I’m splitting this post into two, so as to properly cover the incredible intellectual accomplishments of these two economists.
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Utopia, you are standing in it! 
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