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A Prized Contract
The work in microeconomics theory for which Oliver Hart and Bengt Holmström have received this year’s Economics Nobel Prize goes back to the 1970s and 1980s when the foundations of contract theory were being firmed up (पुष्टि). Their work has provided economists the tools to understand interactions between entities in a range of fields, such as the design of performance incentives in firms and schools, corporate governance, privatization, constitutional law, and entrepreneur-investor relationships. The Royal Swedish Academy of Sciences highlighted that their contributions to understanding “real-life contracts and institutions, as well as the pitfalls (नुकसान/चूक/गुप्त संकट) when designing new contracts” were crucial (महत्वपूर्ण/निर्णायक). Mr. Holmström, in 1979, published a theoretical model and result that significantly enhanced the understanding of risk and incentives in employer-employee relationships. This was called the informativeness principle, which said performance should be linked to all variables or outcomes that provide information on the actions taken by an agent, such as a firm’s manager, and not just the outcomes she can effect. Remunerating (पुरस्कार देना/पारिश्रमिक देना) a manager based on just the share price of her firm will reward and punish her for factors beyond her control, and a better contract would therefore link managerial compensation to the firm’s share price relative to the share prices of other comparable firms. Mr. Hart’s key contribution to contract theory has been the notion (धारणा/अभिप्राय) of incomplete contracts. Not all information is available ex ante (प्रत्याशित); how does a contract allow principals (such as employers) and agents (such as employees) to negotiate (सुलझाना/हल करना) unforeseen situations? The work by Mr. Hart and his colleagues in this area was cited (उद्धरण देना) by the Academy for its breakthrough nature.
The Economics Nobel raises larger questions given the high-profile nature of the subject and the fact that it is the only social science for which a prize is awarded. Analysis from The Economist and the Nobel organization shows that of the 77 laureates who shared the 48 economics prizes awarded between 1969 and 2016, all of 38 were U.S. residents and 10 were British. Economic historians Avner Offer and Gabriel Söderberg recently pointed out that while the prize may not have a significant liberal (उदार) or conservative (रूढ़िवादी / अपरिवर्तनवादी / अनुदारपंथी) bias (झुकाव/ढाल), only one person has been awarded a prize for ‘social democracy’ — how governments provide for their people — as opposed to ‘hard economics’ despite social democratic principles governing how 30 per cent of GDP is allocated in developed countries. Why this has happened is perhaps less important than pointing out that it has happened, so there is an awareness of what the economics prize is, and what it is not.
(Courtesy: The Hindu)

1. Firm up (v) To make something more definite. (पुष्टि करना)
  • Synonyms:  Sustain, Preserve, Confirm, Make Sure
  • Antonyms:  Vary, Wobble, Neglect
Example:  Negotiators will meet later this week to firm up the deal.
Verb Forms: Firm Up, Firmed Up, Firmed Up

2. Pitfall (n) A hidden or unsuspected danger or difficulty, a problem that is likely to happen in a particular situation. (नुकसान/चूक/गुप्त संकट)   
  • Synonyms Hazard, Danger, Peril, Entanglement
  • Antonyms Security, Safety
Example:  She was well aware of the potential pitfalls of running a business.

3. Crucial (ad) Of great importance. (महत्वपूर्ण/निर्णायक)
  • Synonyms Vital, Necessary, Decisive, Essential
  • Antonyms Inessential, Trivial, Insignificant
Example:  This game is crucial to our survival.
Related Words: Crucially (adv) (अत्यावश्यक रूप से)

4. Remunerate (v) Pay (someone) for services rendered or work done. (पुरस्कार देना/पारिश्रमिक देना)  
  • SynonymsReimburse, Pay Off, Make Payment To, Compensate 
  • Antonyms Charge, Impose To Repay
Example:  The salary earned by teachers is not enough remuneration for all the work they do on a daily basis.
Verb Forms: Remunerate, Remunerated, Remunerated
Related words: 
  • Remunerated (ad) (वैतनिक)
  • Remuneration (n) (प्रतिफल)

5. Notion (n) A conception of or belief about something. (धारणा/अभिप्राय)   
  • Synonyms  Belief, Conception, Comprehension, Intent, Purport
  • Antonyms Misunderstanding, Un Comprehensive
Example:  This notion of progress, however, brings up an interesting question: Just how advanced are we?
Related words: 
  • Notional (ad)   (अनुमानित)
  • Nationalist (n) (विचारक)
  • Notionally (adv) (अनुमानतः)

6. Negotiate (v) Obtain or bring about by discussion. (सुलझाना/हल करना)
  • Synonyms Talk, Consort, Converse, Sort Out, Untangle, Settle
  • Antonyms:  Worsen, Disagree, Confuse
Example:  The two sides have yet to show their willingness to negotiate.
Verb Forms: Negotiate, Negotiated, Negotiated
Related words: 
  • Negotiable (ad) (बातचीत योग्य)
  • Negotiation (n) (बातचीत)

7. Cite (v) To mention something as an example, explanation, or proof of something else. (उद्धरण देना)  
  • Synonyms Mention, Quote, Refer
  • Antonyms:  Conceal, Forget
Example:  Bates pulled out of the competition, citing personal reasons.
Verb Forms: Cite, Cited, Cited
Related words: 
  • Citable (ad) (उल्लेखनिय)
  • Citation (n) (उद्धरण)

8. Liberal (ad) Willing to respect or accept behavior or opinions different from one's own. (उदार)
  • Synonyms:  Generous, Lenient, Chivalrous, Suave
  • Antonyms Ungenerous, Conservative, Narrow, Limited
Example: Emily's past was a little too liberal for such a conservative family.
Verb Forms: Liberate (मुक्त करना), Liberated, Liberated
Related Words: 
  • Liberal (n) (उदार आदमी / स्वार्थहीन आदमी) 
  • Liberalization   (उदारीकरण)

9. Conservative (ad) Averse to change or innovation and holding traditional values. (रूढ़िवादी/अपरिवर्तनवादी/अनुदारपंथी)   
  • Synonyms:   Illiberal, Pedantic, Donnish, Conventional
  • Antonyms:  Changeable, Wavering, Liberal, Open Minded
Example:  Some of the conservatives among the Jews opposed these innovations, but the current of progress was too strong for them.
Related words:
  • Conservative (n): A person who is averse to change and holds traditional values. (रूढ़िवादी व्यक्ति)
  • Conservatively (adv) :(परंपरागत ढंग से)

10. Bias (n) Inclination or prejudice for or against one person or group, especially in a way considered to be unfair. (झुकाव/ढाल)  
  • Synonyms: Tendency, Inclination, Partiality
  • Antonyms:  Fairness, Disinclination, Impartiality
Example:  After a long court battle, the firm was found guilty of showing bias against females in its promotion practices.
Verb Forms: Bias (झुकाव होना), Biased, Biased
Related words: 
  • Bias (v): cause to feel or show inclination or prejudice for or against someone or something. (झुकाव होना)
  • Biased (ad): (अभिनत)
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