- Title: Two economists win Nobel for insights on setting pay, rewards
- Date: 10th October 2016
- Summary: BOSTON, MASSACHUSETTS, UNITED STATES (OCTOBER 10, 2016) (REUTERS) VARIOUS OF JOINT NOBEL ECONOMICS PRIZE WINNER BENGT HOLMSTROM'S RESIDENCE (SOUNDBITE) (English) JOINT NOBEL ECONOMICS PRIZE WINNER BENGT HOLMSTROM SAYING: "I hope it’s not too much. So you know, it's of course very gratifying to get this prize but at the same time one understands that there are a lot of deserving people and it's always an element of luck to be chosen. So I hope it doesn't get to one's head too much or I certainly don't plan to pontificate as much as some of the Nobel Prize winners and I hope that I will continue to do my work and be excited by it. " (SOUNDBITE) (English) JOINT NOBEL ECONOMICS PRIZE WINNER BENGT HOLMSTROM SAYING: "This is about, initially about financial incentives and you know the trajectory of the research has gone towards realizing that incentives are not just about money and paying executives or whatever but you know incentives is a whole system and includes job designs and organizational designs and culture and other dimensions like that so that, there has been kind of the broader, broader context and understanding how difficult it is to design incentives and how important it is to get the various pieces to, to fit each other. So that has been one of the big themes and then also understanding that there are a lot of implicit incentives, driving people's motivation, we call them career conservancy or you know and you see it in the election for instance now, the fact that the way they behave is very much driven by what they hope to achieve, this is to become president and influence people and so on and once you say that, incentives have always come with some negative sides also. So financial incentives is basically things that you have to be very careful about because they may drive good things of course but they also come with side effects." (SOUNDBITE) (English) JOINT NOBEL ECONOMICS PRIZE WINNER BENGT HOLMSTROM SAYING: "Oliver Hart he is a longtime friend and I couldn't be happier to share this prize with him. I've known him for 30 or maybe 40 years soon and he's here in Cambridge and he's my closest intellectual friend here and personal friend also and he has been important for my thinking and I hope I have been important for his thinking and it’s just terrific to share it with him and very reassuring also and had he not been there I would have been less happy."
- Embargoed: 25th October 2016 15:22
- Keywords: Nobel peace prize economics
- Location: BOSTON, MASSACHUSETTS, UNITED STATES
- City: BOSTON, MASSACHUSETTS, UNITED STATES
- Country: USA
- Topics: Economic Events
- Reuters ID: LVA00153FB0W7
- Aspect Ratio: 16:9
- Story Text: Finland's Bengt Holmstrom and British-born Oliver Hart won the Nobel Economics Prize on Monday (October 10) for work that addresses a host of questions from how best to reward executives to whether schools and prisons should be privately owned.
Their findings on contract theory have implications in such areas as corporate governance, bankruptcy legislation and political constitutions, said the Royal Swedish Academy of Sciences, which announced the 8 million Swedish crown ($928,000) prize.
Holmstrom said he felt grateful and lucky to have won the Nobel Economics Prize.
"I hope it's not too much. So you know, it's of course very gratifying to get this prize but at the same time one understands that there are a lot of deserving people and it's always an element of luck to be chosen. So I hope it doesn't get to one's head too much or I certainly don't plan to pontificate as much as some of the Nobel Prize winners and I hope that I will continue to do my work and be excited by it," he said at his residence in Boston.
Holmstrom has studied the setting of contracts for workers from teachers to corporate bosses.
"This is about, initially about financial incentives and you know the trajectory of the research has gone towards realizing that incentives are not just about money and paying executives or whatever but you know incentives is a whole system and includes job designs and organizational designs and culture and other dimensions like that so that, there has been kind of the broader, broader context and understanding how difficult it is to design incentives and how important it is to get the various pieces to, to fit each other," Holmstorm said.
So financial incentives is basically things that you have to be very careful about because they may drive good things of course but they also come with side effects," he added.
Hart is an economics professor at Harvard University while Holmstrom is a professor of economics and management at the Massachusetts Institute of Technology.
Hart's work has focused in part on understanding which companies should merge and the right mix of financing, and when institutions such as schools, prisons and hospitals should be privately or publicly owned, the academy said in a statement.
Holmstrom says he is very glad he won the joint Prize with Hart.
"He's my closest intellectual friend here and personal friend also and he has been important for my thinking and I hope I have been important for his thinking and it's just terrific to share it with him and very reassuring also and had he not been there I would have been less happy," he said.
The nine academics who won Nobel prizes this year in medicine, physics, chemistry and economics included five Britons, a Frenchman, a Finn, a Dutchman and a Japanese.
Six of the winners, including all five Britons, are based at U.S. universities. - Copyright Holder: REUTERS
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