Two Harvardians have been awarded Nobel Prizes for their contributions to scholarship and society this year. Furer professor of economics Oliver Hart won the Prize in Economic Sciences, which he shares with MIT’s Bengt Holmström for their work on contract theory. “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,” the Swedish Royal Academy of Sciences wrote in its press release. Hart’s insight was on incomplete contracts: a contract cannot possibly predict every scenario that might arise between an employer and an employee, or a patient and an insurance company. Hart has developed models for understanding what happens in such scenarios and how contracts can be designed to improve them.
Colombian president Juan Manuel Santos, M.P.A. ’81, was awarded the Nobel Peace Prize Friday for negotiating a peace treaty with the Revolutionary Armed Forces of Colombia, a leftist guerrilla group, after five decades of conflict, even though the treaty had been rejected by Colombians by a narrow majority a few days earlier. In a press release, the Norwegian Nobel Committee wrote, “President Santos, despite the ‘No’ majority vote in the referendum, has brought the bloody conflict significantly closer to a peaceful solution, and…much of the groundwork has been laid for both the verifiable disarmament of the FARC guerrillas and a historic process of national fraternity and reconciliation.”
