British-American economist Oliver Hart and Bengt Holmstrom of Finland have won the Nobel Economics Prize for their work on contract theory. The Royal Swedish Academy of Sciences said the pair won for their work on contractual theory, and that their work focussed on contracts like insurance claims, property rights and salaries.

Their groundbreaking work has laid “an intellectual foundation” for designing policies and institutions in many areas, from bankruptcy legislation to political constitutions. Hart, born in 1948, is an economics professor at Harvard University in the United States, while Holmstrom is a professor of economics and management at Massachusetts Institute of Technology.

The pair will share the eight million kronor (826,000 euros, USD 924,000) prize. Last year, the award went to US-British researcher Angus Deaton for his groundbreaking work on poverty.

The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968. It was not part of the original group of awards set out in dynamite tycoon Nobel’s 1895 will. Economy is the fifth of this year’s Nobels. The prizes for physiology or medicine, physics, chemistry and peace were awarded.