Contract theory in everyday life Fri Nov 4, 2016 9:42AM HomeProgramsEconomic Divide MIT Professor Bengt Holmstrom is seen during a press conference at MIT announcing his shared Nobel Prize in Economics with Harvard Professor Oliver Hart, in Cambridge, Massachusetts, October 10, 2016. (Photo by AFP) The much coveted Nobel Prize in Economics was recently handed out. The topic: Contract theory. What is contract theory? And How does it apply to everyday life and the economy?