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"(Their work)
lays an intellectual foundation for designing policies and
institutions in many areas, from bankruptcy legislation to
political constitutions," the Royal Swedish Academy of Sciences
said on announcing the 8 million Swedish crown ($928,000) prize.
Hart is economics professor at Harvard University while
Holmstrom is professor of economics and management at the
Massachusetts Institute of Technology.
"I woke at about 4:40 and was wondering whether it was getting
too late for it to be this year, but then fortunately the phone
rang," Hart was quoted as saying on the official Twitter account
of the Nobel Prize.
"My first action was to hug my wife, wake up my younger son."
Hart's work has helped understanding which companies should
merge and the right mix of financing and when institutions such
as such as schools should be privately or publicly owned, the
academy said in a statement.
Holmstrom's work helped how to formulate contracts for
executives, the statement added.
The economics prize, officially called the Sveriges Riksbank
Prize in Economic Sciences in Memory of Alfred Nobel, was
established in 1968. It was not part of the original group of
awards set out in dynamite tycoon Nobel's 1895 will.
Economics is the fifth of this year's Nobels. The prizes for
physiology or medicine, physics, chemistry and peace were
awarded last week. The literature prize is due on Thursday.
(Reporting by Anna Ringstrom and Bjorn Rundstrom; Editing by
Alistair Scrutton and Angus MacSwan)
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