Two economists were jointly awarded the Nobel Prize for Economic Sciences 2016 "for their contributions to contract theory", the Swedish Royal Academy of Sciences announced on Monday.

"The new theoretical tools created by Oliver Hart and Bengt Holmstrom are valuable to the understanding of real-life contracts and institutions, as well as potential pitfalls in contract design," said a statement by the Academy.

Modern economies are held together by innumerable contracts. The new theoretical tools created by Hart and Holmstrom are valuable to the understanding of real-life contracts and institutions, as well as potential pitfalls in contract design, said an official statement released by the Academy, Xinhua news agency reported.

Answering questions at the press conference after the announcement, Holmstrom said he was "very happy, very lucky, and grateful" to win the prize.

Hart, born in Britain in 1948, is a Professor of Economics at Harvard University in the US. 

Holmstrom, born in Finland in 1949, is an Economics and Management Professor at the Massachusetts Institute of Technology, also in the US.

This year's prize amounts to $9,30,000 to be shared equally between the two laureates.