Oliver Hart and Bengt Holmstrom just won the 2016 Nobel Prize in economics

Oliver Hart and Bengt Holmström just won the 2016 Nobel Memorial Prize in Economics.

They were given the prize for work on contract theory and providing "a comprehensive framework for analysing many diverse issues in contractual design, like performance-based pay for top executives, deductibles and co-pays in insurance, and the privatisation of public-sector activities."

Oliver Hart is currently the Andrew E. Furer Professor of Economics at Harvard University, where he has taught since 1993.

Bengt Holmström is the Paul A. Samuelson Professor of Economics at Massachusetts Institute of Technology, where he also was head of the Economics Department from 2003-2006.

The prize is given to an economist who has made a substantial contribution toward the subject, with an award of 10 million Swedish krona.

Unlike Nobel honors in other sciences and areas, the economics award is a collaboration between Sweden's central bank, called the Sveriges Riksbank, and the Nobel Foundation.

The prize has previously gone to such major names as Milton Friedman, Paul Krugman, and Friedrich von Hayek. Political scientists whose work has influenced economics as a discipline have also been honoured in the past.

Last year it went to Deaton was given the prize for his work on "consumption, poverty, and welfare."