Skip to content
Nobel Jews
Portrait of Oliver Hart
Photo: Bengt Nyman from Vaxholm, Sweden, EM1A0854 · CC BY 2.0 via Wikimedia Commons

Sveriges Riksbank Prize in Economic Sciences · 2016

Oliver Hart

He showed why ownership matters when contracts can't foresee everything, shaping how firms, loans and public services are designed.

The Nobel citation: “for their contributions to contract theory”
Born
October 9, 1948, London, United Kingdom
Shared with
Bengt Holmström
Affiliation at the time
Harvard University, USA

Economics prize

2016

Shared with 1 other laureate.

Age that year

68years

Born in 1948.

Sources cited

19

Fact-checked September 24, 2026.

  • His German-born Jewish mother, Ruth, left Germany in 1933, just after Hitler took power. She later became a gynecologist in Britain, when women doctors were uncommon.
  • His father helped run Britain's landmark 1948 streptomycin trial, testing the TB drug that won Selman Waksman a Nobel Prize. He lived to 106.
  • A Cambridge tutor advised him to drop mathematics, and he ignored it. He took up economics partly because he kept losing political arguments about the balance of payments.
  • He and Sanford Grossman spent ten intense days in 1983 on the question behind his prize: why would one firm ever buy another instead of simply signing a contract with it?
  • His analysis of private prisons warned that contracts can't pin down guard quality or the use of force, so cost cutting can come at the expense of safety.

The breakthrough

Incomplete contracts: who decides when the contract is silent

Much of economic life runs on contracts: jobs, loans, supply deals. Before Hart, economic theory mostly imagined 'complete' contracts that say exactly what happens in every possible situation. Real contracts are nothing like that. They are vague and leave things out, because no one can foresee everything. In 1983, working with Sanford Grossman, Hart asked what happens in those gaps. Their answer was that someone must hold the right to decide whatever the contract doesn't cover, and that this leftover right is what ownership really is. Think of a rented apartment. The lease sets the rent, but if you want to knock down a wall, the owner decides. Hart showed that who holds these leftover rights changes how people behave. In his Nobel lecture he uses the example of a power plant built next to a coal mine. If the mine has a separate owner, it can later squeeze the plant, for instance by supplying cheaper, dirtier coal the contract failed to rule out. Fearing that, the plant may never invest in the ideal location. Buying the mine removes the threat, but it weakens the mine manager's reason to find improvements, since the new boss can claim the gains. So the best ownership is the one that protects the investments that matter most. This 'property rights theory', built with Grossman (1986) and John Moore (1990), helps explain when firms should merge, how debt contracts work, and when governments should run services themselves.[1],[3],[4],[5]

“the public-private choice should be seen as a matter of efficiency, not ideology.”
Oliver Hart, From his Nobel Prize lecture, 'Incomplete Contracts and Control' (Stockholm, 8 December 2016), summing up the main lesson of his 1997 analysis of private prisons.[5]

What it meant for humanity

Hart's ideas are tools for thinking, and their effects show up in how contracts, companies and public services are designed. The Nobel committee says his findings changed how economists understand who owns and controls businesses, and reached well beyond economics into political science and law. In finance, the theory explains a pattern seen in real deals. Entrepreneurs keep control while things go well, and investors gain decision rights when performance slips, as in venture capital contracts. It also explains why ordinary bank loans promise fixed repayments backed by collateral. Hart told reporters on the day of his prize that in venture capital deals the key issue is who gets control, and that founders who focus only on money can end up pushed out. In public policy, his 1997 paper with Andrei Shleifer and Robert Vishny asked when government should provide a service itself and when it should hire a private company. Private contractors have strong reasons to cut costs. That helps when quality is easy to check or competition keeps firms honest, and it hurts when neither holds. The authors judged the case for privately run maximum-security prisons weak, because contracts cannot pin down the quality of guards or the use of force, while private garbage collection made sense. In 2016 a US Justice Department review found that, in most categories it examined, privately run federal prisons had more safety and security incidents per capita than comparable government ones. More recently, with Luigi Zingales, Hart has argued that companies should pursue what their shareholders actually value, which can include a cleaner environment, not only profit. He has taught economists at Cambridge, the London School of Economics, MIT and Harvard.

  • The Nobel committee says his tools help decide whether two companies should combine, how firms should balance borrowing against selling shares, and whether schools or prisons belong in public or private hands.[3]
  • The theory explains why most bank loans promise fixed payments backed by collateral, and why investors take more control when a firm struggles, a feature of venture capital contracts.[4],[5]
  • His 1997 prison analysis warned that private operators could save money with cheap, unqualified guards. A 2016 Justice Department review found more safety incidents per capita in contract prisons.[4],[5],[14]
  • The Nobel committee says the laureates' analysis can guide how societies design rules as different as bankruptcy law and national constitutions.[3]
  • Harvard, where he has taught since 1993, named him a University Professor, its highest faculty honor, in 2020, noting that his tools are used in finance, government and law.[8]
  • With Luigi Zingales, Hart has argued that companies should act on what their shareholders actually value, such as a cleaner environment, rather than on profit alone.[2],[7]

Impact in numbers

Hart's contribution is a way of thinking about ownership, control and contracts, and its effects cannot honestly be counted. The Nobel committee credits it with wide influence across economics, political science and law, and says it can guide the design of rules as different as bankruptcy law and national constitutions. Its influence shows in how venture capital and loan contracts divide control, in debates over mergers and corporate governance, and in decisions about whether governments should run services such as prisons themselves. We record no numerical claims. No outcome in our registry fits his work, and the chain from a theory of the firm to any measurable gain in output, lives or welfare is too long, and too shared with other scholars, lawyers and policymakers, to give him a defensible share.

EconomyFundamental science

No number is given here on purpose. Some contributions cannot be counted honestly, and we would rather describe them than invent a figure.

The double edge

No harms have been documented from Hart's work. Its limits are ones he states himself: in his Nobel lecture he said there is still no tractable, widely agreed theory of incomplete contracts. His prison analysis also sits inside a live political fight, and a 2021 order barring renewal of Justice Department private-prison contracts was revoked in 2025.

  • Minor

    Contested foundations

    In 1999 Eric Maskin and Jean Tirole showed that, if people are fully rational, cleverly designed contracts could make ownership unnecessary, undercutting the theory's logic. Hart said the ways around this rest on strong assumptions he is uncomfortable with, turned to behavioral ideas, and admitted in 2016 that no tractable, widely agreed theory yet exists.[5]

  • Minor

    Private prisons remain an unsettled policy fight

    Hart and his co-authors judged the case for private maximum-security prisons weak. A 2016 Justice Department review found more incidents per capita in contract prisons, though it said it could not assess every factor, such as differences in inmate populations. A 2021 executive order told the Justice Department not to renew private prison contracts, and a January 2025 order revoked it, so the question remains contested.[5],[14],[15],[16]

Against the odds

Hart grew up in comfort, and we found no record that he personally faced antisemitism. His family's story shows how close the danger was. His mother, Ruth Meyer, was a German-born Jewish woman who left Germany in 1933, just after Hitler came to power. That spring the new regime began pushing Jews out of German life. An April 1933 law pushed Jewish civil servants out of state jobs, other measures that month limited Jewish students and restricted Jewish doctors and lawyers, and by 1938 Jewish doctors were effectively barred from treating non-Jewish patients. In Britain she became a gynecologist at a time when women doctors there were still uncommon. Hart's father came from a long-established Anglo-Jewish family. Hart was born in London in 1948 and grew up in Hampstead. The obstacles he describes in his own career were ordinary ones: a middling Cambridge degree, rejections from MIT, Harvard and Yale, and funding cuts to British universities under the Thatcher government that helped push him and his wife to the United States in 1984. His wife, Rita Goldberg, is the daughter of Hilde Jacobsthal, who fled the Netherlands for Belgium after her parents were arrested in 1943 and lived out the war among the Resistance.

  • 1933

    Exile

    His mother, Ruth Meyer, a German-born Jewish woman, left Germany in 1933, just after Hitler came to power. She later became a gynecologist in Britain. Hart was born 15 years later, so he was not himself a refugee.[2]

  • 1933

    Persecution

    In April 1933 Nazi Germany began excluding Jews from public life: Jewish civil servants were pushed out of state jobs, Jewish student numbers were capped, and Jewish doctors and lawyers faced new restrictions. By 1938 Jewish doctors were effectively banned from treating non-Jewish patients.[13]

  • 1984

    Other

    Cuts imposed on British universities by the Thatcher government left poor academic prospects for him and his wife, a literature scholar. In 1984 they moved to the United States, where he joined MIT.[2]

Jewish background

Both parents JewishRelationship to Jewish identity not documented

Both of Hart's parents were Jewish. In his Nobel autobiography he describes his mother, the gynecologist Ruth Meyer, as German-born and Jewish, and says she left Germany in 1933, and his father, the tuberculosis researcher Philip D'Arcy Hart, as coming from a long-standing Anglo-Jewish family. His great-grandfather was Samuel Montagu, 1st Baron Swaythling, an Orthodox Jewish banker and member of Parliament. Hart married Rita Goldberg, a literature scholar whose memoir Motherland tells how her mother survived the Holocaust. We found no public statement by Hart about his own religious practice or Jewish identity.[2],[6],[9],[10],[11],[17],[18]

Key dates

  1. 1933

    His future mother, Ruth Meyer, German-born and Jewish, leaves Germany just after Hitler comes to power.[2]

  2. 1941

    His parents marry. His father, Philip D'Arcy Hart, later helps run Britain's 1948 trial of streptomycin, the TB drug found in Selman Waksman's lab.[2],[10],[11],[12]

  3. October 9, 1948

    Born in London, the only child of two doctors; grows up in Hampstead.[1],[2]

  4. 1969

    Graduates in mathematics from King's College, Cambridge.[2],[8]

  5. 1974

    After a master's in economics at Warwick (1972), earns his PhD at Princeton and marries fellow graduate student Rita Goldberg.[1],[2],[8]

  6. 1975

    After a year teaching at Essex, joins the Cambridge economics faculty, where he teaches until 1981; in 1976 begins a roughly 12-year collaboration with Sanford Grossman.[2],[8]

  7. 1983

    In ten intense days in Grossman's Chicago office, the two ask why one firm would buy another, concluding that ownership is the right to decide what a contract leaves out.[5]

  8. 1984

    Moves to the United States for a visiting post at MIT, made permanent in 1985, as funding cuts squeeze British universities.[2],[8]

  9. 1986

    Publishes with Grossman the paper on the costs and benefits of ownership that launches property rights theory, later extended with John Moore (1990).[4],[5]

  10. 1993

    Joins Harvard's economics department, his academic home ever since.[1],[2]

  11. 1997

    With Andrei Shleifer and Robert Vishny, analyzes when government should provide services itself, focusing on prisons.[4],[5]

  12. October 10, 2016

    Wins a half share of the economics Nobel with Bengt Holmström 'for their contributions to contract theory'.[1],[3],[6]

  13. 2020

    Named a Harvard University Professor, the university's highest faculty honor.[8]

  14. 2023

    Knighted in the King's Birthday Honours for services to economic theory.[19]

Sources

  1. 1.Oliver Hart - Facts · NobelPrize.org (Nobel Prize Outreach), 2016
  2. 2.Oliver Hart - Biographical · NobelPrize.org (Nobel Prize Outreach), 2016
  3. 3.The Prize in Economic Sciences 2016 - Press release · Royal Swedish Academy of Sciences / NobelPrize.org, 2016
  4. 4.Contract theory (Popular science background, Prize in Economic Sciences 2016) · Royal Swedish Academy of Sciences / NobelPrize.org, 2016
  5. 5.Incomplete Contracts and Control (Prize Lecture, 8 December 2016) · The Nobel Foundation / NobelPrize.org, 2016
  6. 6.Harvard's Oliver Hart wins Nobel in economics · Harvard Gazette, 2016
  7. 7.No letup for Nobel winner · Harvard Gazette, 2016
  8. 8.Oliver Hart named University Professor · Harvard Gazette, 2020
  9. 9.Jewish economist at Harvard shares Nobel Prize · Jewish Telegraphic Agency (JTA), 2016
  10. 10.Philip D'Arcy Hart (obituary by Philip Draper and John Skehel) · The Guardian, 2006
  11. 11.Philip Montagu D'Arcy Hart (1900-2006) (E. M. Tansey) · James Lind Library, 2006
  12. 12.Selman Abraham Waksman - Facts · NobelPrize.org (Nobel Prize Outreach), 1952
  13. 13.Anti-Jewish Legislation in Prewar Germany · United States Holocaust Memorial Museum, Holocaust Encyclopedia
  14. 14.Review of the Federal Bureau of Prisons' Monitoring of Contract Prisons (Evaluation and Inspections Division 16-06) · U.S. Department of Justice, Office of the Inspector General, 2016
  15. 15.Executive Order 14006: Reforming Our Incarceration System To Eliminate the Use of Privately Operated Criminal Detention Facilities · Federal Register, 2021
  16. 16.Executive Order 14148: Initial Rescissions of Harmful Executive Orders and Actions · Federal Register, 2025
  17. 17.Motherland: Growing Up With the Holocaust (Rita Goldberg), book page · The New Press
  18. 18.Rita Goldberg (author biography) · The New Press
  19. 19.The King's Birthday Honours 2023 Overseas and International List: Knight Bachelor and Order of the British Empire · GOV.UK (Cabinet Office / Foreign, Commonwealth and Development Office), 2023

Fact-checked on September 24, 2026 by a separate AI fact-checking pass that re-opened the sources, with 7 corrections made. How we check

Suggest a correction