bengt holmstrom is from finland. he's a professor at massachusetts institute of technology. swedish academy of sciences awarded the prize to the two professors for developing contract theory, a general framework for understanding how contracts work. in the 1970s, holmstrom showed how a principals such as company shareholders should design a contract for an agent such as the ceo. he explained how the contract should link the agent's pay to performance. in the 1980s, hart made a major contribution to the understanding of incomplete contracts. these are contracts that don't cover every possibility in a legal relationship. the academy says the professors laid the foundation for designing policies and institutions in many areas from bankruptcy legislation to political constitutions. >>> autumn is the season when the arts schedule in japan gets busy after a long, hot summer. two events brought artists and audiences from around the world together. nhk world's maria naka reports. >> reporter: "unknown asia" featured 160 upcoming artists from countries and territories across the regi

bengt holmstrom thanked the committee by phone. >> i am grateful. >> contract theory affects us all. together, they laid the foundation for better design deals. their work goes further than that. theory looks at when not to increase salaries and considers whether it pays off in the long run. >> this is a very fundamental theory to understand contracts. contracts are central to get different people to walk rate. when you want two people, you need to make sure they work in the same direction and are happy with the outcome. that is what contract theory is about. signing a contract might be commonplace. there is a science to that as this noble prize goes to show. >> we're talking about a big multibillion euro contract. one says greece has done everything. it will get that money right away with more to come at the end of the month. the cuts have been deep. many say they have gone too far. >> sites like the acropolis in athens is attracting more and more tourists. the country is expected to host nearly 28 million people. the country's tourism associations is -- says it means more jobs has

and bengt holmstrom is a finnish economist -- teaching at m-i-t. holmstrom researched employment contracts... including those between c-e-os and the extraordinary high salaries paid to c-e- o's. and hart's research looked at whether providers of public services should be publicly or privately owned... with a particular concern about privately run prisons. toss to weather weather increasing clouds tonight with temperatures falling through the possible overnight with a low in the middle 50s. mostly cloudy tuesday with scattered showers and a high around 70. we have a better chance for showers and thunderstorms wednesday as a cold front crosses. highs will drop into the 50s thursday. scattered showers overnight. low: 54 dewpoint: 49 wind: se 5-10 mph tuesday: a mix of sun and clouds, with a few scattered showers. high: 70 dewpoint: 51 wind: s 5-15 mph wednesday:mostly cloudy with showers & t-storms likely. wind: sw/nw 5-15 mph thursday: mostly sunny and cool. patchy morning frost. am low: 38 high: 55 dewpoint: 35 wind: w 5-10 mph friday: mostly sunny.

award the prize in econonomic science in memory of alfred nobel, for 2016 to oliver hart and ben bengt holmstromor theirir contributions to contract theory. >> oliver hart was born in england, a professor at harvard university. bengt homestrom is from finland, a professor at massachusetts institute of technology. the royal swedish academy of sciences awarded the prize to two professors for developing contract theory, a general framework to understanding how contracts work. in the 1970s, holmstrom showed how a principal, such as company shareholders should design a contract for an agent such as the ceo. he explained how the contract should link the agent's pay to performance. in the 1980s, hart made a major contribution to the understanding of incomplete contracts. these are contracts that don't cover every possibility in a legal relationship. the academy says the professors laid the foundation for designing policies and institutions in many areas from bankruptcy legislation to political constitutions. >>> people in parts of the caribbean islands and southeast u.s. are dealing with the aftermath

the british-born oliver hart from hartford, and bengt holmstrom from m.i.t..heir work is basically about balancing the means and the man's of the people of an organization who agreed to a contract. their research touches on issues that are very topical at the moment. has looked at privatization. holmstrom looks at executive pay, talking about how much those who work in teams should be paid and when they should be promoted. we will go to people trying to get away from such structures. that is the case in india, where young people are feeling a tax that are fueling a startup boom. a -- are feeling fueling a startup boom. with a number of startups, co-working spaces have sprung up across delhi and bangalore. >> this is a lively bar in new delhi. at night, it is packed with partygoers, drinking, and dancing. by day, it is transformed. the atmosphere much more productive if not necessarily much more button-down. of the new delhi's burgeoning co-working spaces. again, it is a millennial personality. people do not want to bow to random bosses in their offices. seen -

s bengt holmstrom were given the award this morning for their contributions to contract theory. specifically, the pair shed new light on how business contracts help people deal with conflicts of ies >> the 40th annual tufts health plan 10k for women is underway. live sky 5 over the course of the race kicking off just minutes ago at the beacon street start. thousands of women are competing for the usa track and field official 10k championship title. great crew there. >> a great day for. >> totally. not too hot or cold. it's do or die for the red sox no one there is ready for winter, that's for sure. but, like it or not, the red sox are on the brink of elimination today. away we go. clay buckhholz gets the ball for the sox. game time, 6:08. also keep in mind, this could be -- could be big papi's final game at fenway. so you can bet the team will have that in mind as they try to keep their pennant hopes alive. rain forced the mlb to call yesterday's game against the indians. only action on the field. if the sox pull off today's matchup, game 4 would be tuesday. a potential game 5 w

professors bengt holmstrom of mit and oliver hart of harvard are sharing the 2016 nobel prize in economics. they won for their contribution to contract theory which helps to shape executive pay. hart is the 48th harvard faculty member awarded the nobel prize. holmstrom is the 5th person from mit's economics department to win. because people talks a much about them. one does not really expect it in some ways. maria: both men have taught at their respective schools since the early 1990's. ed: let's take you to made in massachusetts. some of the best gouda you can buy, is made right here in mass. tonight, doug meehan takes us to the company churning out that cheese for decades. doug: when it comes to good gouda at smith's country cheese in winchendon they believe and it all starts with the ladies out back. >> we get the milk at from the 4 a.m. cows that day, it pops right up to this room, vat, and it's fresh. allie catlin hasn't always been doug up to her elbows in curds : and whey. just year ago she was working in first thought. doug: but 11 months ago she and her husband decided to get into

oliver hart of harvard university and bengt holmstrom of massachusetts institute of technology were honored for their work in contract theory. in stockholm today, the nobel committee said they've shed light on everything from paying executives to privatizing prisons. >> thanks to their research we now have, can analyze not just financial terms, who should get paid what, but also the control and decision rights: ownership, property rights and other types of decision rights and contracts. >> sreenivasan: hart was born in britain and has taught at harvard since 1993. holmstrom is from finland. on wall street today, stocks rose as the price of oil topped $51 a barrel-- the highest in a year. the dow jones industrial average gained 88 points to close at 18,329. the nasdaq rose 36 points, and the s&p 500 added nearly 10. still to come on the newshour: the g.o.p. divide after last night's fiery presidential debate. in florida, what hurrican3 matthew has left in its wake. justice ruth bader ginsberg's newest book "my own words," and much more. >> sreenivasan: we return to the race for the white hou

episode six years ago, in which the character milhouse bet lisa simpson that mit professor bengt r. holmstrom would win the nobel prize in economics in 2010. holmstrom was awarded the 2016 nobel prize this week. can you believe that? so the prediction was just a few years off. holmstrom received the honor for his pioneering work on designing better contracts. how about that. look at that. and a lot of things in the simpsons when you go back and a lot of people watch the show and said the simpson said that 10 years ago. breaking new ground. maybe i should have them do the weather forecast. if they can predict the future. offset by a few years of course but at least they would get it right. farmer's almanac. exactly. whether these days it's rated when it is you don't hear about the end exactly. whether these days it's rated when it is you don't hear about the end of it. looking at it started off fairly cloudy. fairly cool that no progress. starting to see the tops of the buildings of the mile high city from the pinnacle camera. this was not the case a couple of hours ago we couldn't even see th