Oliver Hart

Oliver Hart is the Andrew E. Furer Professor of Economics at Harvard University and a 2016 Nobel Laureate in Economic Sciences (shared with Bengt Holmström). Hart is known for developing the theory of incomplete contracts — the idea that contracts cannot specify every possible contingency, and that the allocation of residual decision rights (control rights) between contracting parties fundamentally determines economic outcomes. This framework has been enormously influential in corporate finance: it provides the theoretical basis for understanding why debt contracts are structured as they are, why equity holders have residual control, why hostile takeovers discipline management, and how ownership structure affects incentives. Hart's work with Grossman on the costs and benefits of firm integration, and his work with Moore on debt and renegotiation, are foundational texts in financial contracting. He has also applied incomplete contracts theory to the boundary between public and private provision of services, with implications for privatization debates.