Cairo- Oliver Hart and Bengt Holmstrom have answered during their decades’ journey questions related to economies that lack efficiency. The two scientists were granted on Monday the Nobel Prize in Economics as recognition to their efforts in setting the theoretical framework of the “contract”.

“This theory has really been incredibly important, not just for economics, but also for other social sciences,” said Per Stromberg, member of the prize committee and professor at the Stockholm School of Economics.

“Their findings on contract theory have implications for corporate governance, bankruptcy legislation and political constitutions, among other fields,” said the Royal Swedish Academy of Sciences, which announced the 8 million Swedish crown ($928,000) prize.

Contract theory considers, for example, whether managers should get paid bonuses or stock options, or whether teachers or healthcare workers should be paid fixed rates or by performance-based criteria.

“I woke at about 4:40 and was wondering whether it was getting too late for the Nobel Prize this year, but then fortunately the phone rang. My first action was to hug my wife, wake up my younger son,” Hart was quoted as saying on the official Twitter account of the Nobel Prize.

“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.

Aliah al-Mahdi, economy instructor at Cairo University, told Asharq al-Awsat that Oliver Hart has huge contributions in the economy and the Royal Swedish Academy of Sciences has always been keen to grant this award to those who add to the economy and other sciences.