Template-Type: ReDIF-Article 1.0

Author-Name: László Á. Kóczy
Author-Workplace-Name: Institute of Economics of the Research Centre for Economic and
Regional Studies, Óbuda University
Author-Email: koczy@krtk.mta.hu
Author-Person: pko27

Author-Name: Hubert János Kiss
Author-Workplace-Name: Institute of Economics of the Research Centre for Economic and
Regional Studies, Eötvös Loránd University
Author-Email: kiss.hubert.janos@krtk.mta.hu
Author-Person: pki288

Title: Hart and Holmström’s Contributions to
Contract Theory

Abstract: The Prize in Economic Sciences in Memory of Alfred Nobel 2016 was awarded jointly
to Oliver Hart and Bengt Holmström for their contributions to contract theory.
Contract theory is a field of applied game theory, bringing into focus the conflict
between the owner – the principal – and the company’s appointed manager – the
agent. In this study, we present the Principal–Agent model proposed by Holmström
and describe a few offshoots of the original model, before proceeding to discuss
Hart’s research on the aspects of ownership in Principal–Agent models. Although the
two laureates are primarily known for their theoretical models, in our introduction
we disregard the unnecessary formulas and illustrate the models with examples.

Classification-JEL: C72, D82, D86
Keywords: contract theory, incentives, the Principal-Agent problem, Nobel prize,
risk, property rights
Pages: 162–174
Volume: 16
Issue: 1
Year: 2017
File-URL: http://english.hitelintezetiszemle.hu/letoltes/laszlo-a-koczy-hubert-janos-kiss.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:16:y:2017:i:1:p:162-174