Image: Yle

Announcing the 8 million Swedish crown prize, the Royal Swedish Academy of Sciences stated that the work of Holmström and Hart "...lays an intellectual foundation for designing policies and institutions in many areas, from bankruptcy legislation to political constitutions."

The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968. The prizes for physiology or medicine, physics, chemistry and peace were awarded last week. The literature prize is due on Thursday.

Holmström, 67, was born in Helsinki and has been professor of economics at the Massachusetts Institute of Technology since 1994; before that he held the post of professor of economics at Yale.