Bengt Holmström
Bengt Robert Holmström (born April 18, 1949 in Helsinki ) is a Finnish economist and professor at the Massachusetts Institute of Technology . In 2016 he and Oliver Hart received the Alfred Nobel Memorial Prize for Economics for “Contributions to Contract Theory ”.
Life
Bengt Holmström completed his university education in mathematics, physics and statistics in 1972 with a Bachelor of Science from the University of Helsinki . He then went on to study operations research at Stanford University , where he obtained a Master of Science degree in 1975 . He then stayed at the university for three more years and received his Ph.D. Holmström then went on to teach at the Swedish School of Economics and Business Administration for a year . In 1979 he returned to the USA, where he taught business administration at Northwestern University, first as a lecturer and from 1980 as associate professor . In 1983 he left Northwestern University and went to Yale University as a professor of economics and organization. In 1997 he became Professor of Economics at the Massachusetts Institute of Technology .
In addition to his employment as a full professor, Bengt Holmström held several visiting professorships. For example 1985 to 1986 at Stanford University, 1991 to 1992 at Helsinki University of Commerce , 1996 to 1999 at Stockholm University of Commerce , 1999 at Helsinki University and in autumn 2006 at University of Chicago .
Holmström was a board member of Nokia from 1999 to 2012 and is a member of the board of directors of Aalto University to this day .
Holmström is married to Anneli, nee Kuusakoski, and has a son with her, Sam, nee. 1974.
Memberships
He has received several honorary doctorates from the Stockholm School of Commerce (1998), the Swedish School of Commerce and Vaasa University (1988). He has been a member of the American Academy of Arts and Sciences since 1993 and of the Finnish Academy of Sciences since 2007 . He is also a member of the Royal Swedish Academy of Sciences .
Scientific work
With his research results, Holmström contributed to creating a better understanding of the behavior drivers in employment contracts, especially in top management contracts, in the scientific community as well as in business practice.
In their book “Economics, Organization and Management”, Paul Milgrom and John Roberts (1992) identify four principles of contract drafting (1. Informativeness Principle, 2. Incentive-Intensity Principe, 3. Monitoring-Intensity Principle, 4. Equal Compensation Principle).
The principle of "informativeness" was developed by Hölmström and published in his work Moral Hazard and Observability in 1979. It is used when employers (principals) and employees (agents) do not have the same level of information about future potential performance potential. This principle essentially states that in employment contracts with variable remuneration for employees and managers, all performance indicators should be taken into account that contain additional information about the actual level of performance achieved by the employee or manager. However, the principle also states that the variable remuneration should only use performance indicators that contain information that can be influenced by the employee or top management.
With these findings, Holmström laid the theoretical basis for the application of the relative performance indicator in the top management of companies. This states that top management should be incentivized with a long-term, relative performance indicator as part of their variable remuneration. The use of a relative performance indicator ensures, on the one hand, for the company's top management that they are not punished as part of the variable remuneration by events on which they had no influence as part of their contractual activities (exchange rate fluctuations, monetary policy of the central bank, recessions, etc. ). On the other hand, it ensures for the company's shareholders that the top management is not rewarded as part of the variable remuneration through events over which they had no influence in the context of their contractually defined activities (exchange rate fluctuations, monetary policy of the central bank, economic boom, etc.). Holmström was able to show in his work that the use of relative performance indicators for top management leads on the one hand to a reduction in the remuneration risk, on the other hand more "informative" performance indicators lead to better short and long-term management decisions. Ernst Fehr developed the Market Adjusted Performance Indicator (MAPI) on the basis of the theoretical knowledge about the relative performance indicator from Holmström, which should allow a practical implementation of the concept of performance remuneration in management remuneration of companies.
In the Holmström model named after him, he deals with the hidden action problem of labor deployment by employees. A particular problem here is the “marginal cost of work effort”.
Web links
Footnotes
- ↑ a b MIT Economics: Bengt Holmstrom. In: economics.mit.edu. Retrieved October 10, 2016 .
- ^ The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2016. In: http://www.nobelprize.org . Nobel Media AB, October 10, 2016, accessed October 10, 2016 .
- ↑ Notification of withdrawal (English)
- ↑ http://www.engadget.com/2012/01/26/nokia-plans-board-of-directors-refresh-chairman-to-step-down/
- ↑ Brief introduction (English) , CV (English) , publications (MIT)
- ↑ CURRICULUM VITAE - August 2013 - BENGT ROBERT HOLMSTROM
- ↑ Bengt Holmström: Moral Hazard and Observability. In: The Bell Journal of Economics. 1979 Archived copy ( Memento of the original dated August 4, 2016 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ^ Adriano B. Lucatelli: «Do exchanges reflect the whole truth?" www.finews.ch , February 26, 2016, accessed on February 16, 2017
- ↑ [1]
| personal data | |
|---|---|
| SURNAME | Holmström, Bengt |
| ALTERNATIVE NAMES | Holmström, Bengt Robert (full name) |
| BRIEF DESCRIPTION | Finnish economist |
| DATE OF BIRTH | April 18, 1949 |
| PLACE OF BIRTH | Helsinki |