Bengt Holmström

informativeness principle; principal-agent contract theory.

Emeritus professor at MIT's Department of Economics, Holmström was awarded the Nobel Memorial Prize in Economic Sciences in 2016 (jointly with Oliver Hart). His informativeness principle established that any signal correlated with an agent's unobservable effort should enter an optimal contract. He also extended moral hazard analysis to multi-task and career-concerns settings, influencing pay design across firms and public institutions.