Cambridge graduate and former Churchill College fellow Oliver Hart has been awarded the Nobel Prize in Economics. 

Hart, a King's College mathematics graduate, won the prize alongside Bengt Holmström “for their contributions to contract theory”. 

The pair will receive 8 million Swedish krona (£744,652) from the committee.

Hart, who is currently the Andrew E. Furer Professor of Economics at Harvard University, was a Fellow at Churchill College between 1975 and 1981.

On winning this accolade, Professor Hart said: “I woke at about 4:40 and was wondering whether it was getting too late for it to be this year, but then fortunately the phone rang.”

The Royal Swedish Academy of Sciences, who award the prize, said: “Hart’s findings on incomplete contracts have shed new light on the ownership and control of businesses and have had a vast impact on several fields of economics, as well as political science and law.

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"His research provides us with new theoretical tools for studying questions such as which kinds of companies should merge, the proper mix of debt and equity financing, and when institutions such as schools or prisons ought to be privately or publicly owned.”

"Through their initial contributions, Hart and Holmström launched contract theory as a fertile field of basic research. Over the last few decades, they have also explored many of its applications. Their analysis of optimal contractual arrangements lays an intellectual foundation for designing policies and institutions in many areas, from bankruptcy legislation to political constitutions." 

Professor Michael Proctor, Provost of King's College, said: "We are delighted that a former King's student, Oliver Hart, who read Mathematics here between 1966 and 69, has been awarded the Nobel Prize for Economics.  This is a tremendous honour, not only for Oliver himself, but for Cambridge and King's College. The College extends its warmest congratulations to Oliver on this outstanding achievement which adds to the remarkable reputation for Economics at King's since the time of Maynard Keynes."

The economics prize is the only Nobel Prize not created by Alfred Nobel, and was instead launched in 1968, long after the philanthropist's death.

The prize brings the number of Cambridge affiliates awarded the Nobel Prize to 96, after three alumni were awarded the Physics prize last week. 11 of the 96 prizes have been for Economics, including last year’s winner Angus Deaton, who is an alumnus of Fitzwilliam College.