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SEOUL, South Korea — When Samsung Electronics introduced its sleek, high-end Galaxy Note 7 smartphone in August, one of its senior executives called it “the most intelligent smartphone that we have ever created.” Today, that model — which the South Korean electronics giant was counting on to help it close the gap with Apple, its biggest rival — looks more like an expensive problem that will not go away. Samsung has temporarily halted production of the Galaxy Note 7, a person familiar with the decision said on Monday, amid reports that a number of the devices had caught fire. The decision comes just five weeks after Samsung said it would recall 2.5 million Galaxy Note 7 phones after reports of battery fires, suggesting that it has not been able to fix the problem. Samsung had initially said that the problem was solved, after allowing consumers to trade in their phones for new ones. But production was halted after telecommunications companies in the United States and Australia said they would not offer the Galaxy Note 7 following reports of fires involving new phones in which the problem was supposedly fixed. In a disclosure to the South Korean stock exchange later Monday, Samsung said it was “temporarily adjusting the Galaxy Note 7 production schedule in order to take further steps to ensure quality and safety matters.” It said it hoped to provide an update within a month. Samsung made the decision to halt production for consumer safety reasons and in cooperation with the authorities in the United States and China, according to the person familiar with the process. The problems call into question Samsung’s campaign to catch up with Apple. While Samsung is the world’s largest smartphone company by market share, Apple has a strong hold on the expensive end of the market with the iPhone. Samsung is also grappling with problems on another front. Last week, a large American hedge fund, Elliott Management, called for the company to overhaul its structure, putting pressure on Samsung’s leaders to justify their actions. Samsung had been regaining some ground in the high-end market recently with its latest Galaxy phones, which feature curved edges and offer a more premium feel than its budget phones. The Galaxy Note 7 — with its 5.7-inch screen and a price tag exceeding $800 for a phone not tied to a specific carrier — was supposed to add to that momentum. When the company announced the recall last month, it identified “a battery cell issue” and said it had stopped using batteries from that supplier, which it did not identify by name. But the recurring problem led industry experts to wonder whether the problem went beyond sloppy production and resulted from a faulty battery or software design. The Galaxy Note 7 boasted a higher-capacity battery to help its increasingly sophisticated features, like an iris scanner for added security. It also supported fast and wireless charging technologies. Samsung is by far South Korea’s largest and most profitable company, and its smartphones have been one of its main sources of revenue in recent years. The crisis threatens to undermine the brand name the company has taken decades to build. Last week, Pak Yu-ak, an analyst at Kiwoom Securities Company in Seoul, the capital, estimated that the initial recall was the big driver behind a nearly 40 percent drop in operating profit for Samsung’s IT and mobile device division in the third quarter compared with the second quarter, though he predicted a fourth-quarter rebound. But that was before major telecom companies began saying they would stop offering the Galaxy Note 7. Lee Se-cheol, an analyst at NH Investment & Securities in Seoul, said that if the sales of the Samsung model were to be suspended for the fourth quarter, it would cost $630 million in lost revenue, making the company more dependent on its semiconductor business for profit. Samsung initially won plaudits for the scale of its Sept. 2 recall, the largest ever in the smartphone industry. But the recall has been plagued with problems, including communications issues between Samsung executives and safety officials in the United States. Last week, a Southwest Airlines flight in the United States was evacuated after a Galaxy Note 7 began smoking inside the plane. The owner and his family told the news media that the phone was a replacement model. Samsung said it would investigate the incident. On Sunday, the American wireless carrier AT&T said it would stop selling or replacing Galaxy Note 7 smartphones because of reports of fires. Another major carrier, T-Mobile, also said it was temporarily halting sales and exchanges of new Galaxy Note 7s. SK Telecom and other South Korean mobile carriers have not taken similar steps yet, saying that they were closely monitoring the situation. Three of Australia’s biggest telecom companies — Telstra, Optus and Vodafone Australia — said they had stopped shipping Galaxy Note 7 phones to customers after reports that the replacement model had caught fire in the United States. “We have asked Samsung to provide us with an update on their investigations as a matter of priority and will update our customers as soon as we learn more,” said Steve Carey, a spokesman at Telstra, Australia’s largest carrier. There have been no reported fires in the handsets sold in Australia, Mr. Carey said.

Oliver Hart and Bengt Holmstrom were awarded the Nobel Memorial Prize in Economic Science on Monday for improving the design of contracts, the deals that bind together employers and their workers, or companies and their customers. Dr. Hart, a professor at Harvard, and Dr. Holmstrom, a professor at the Massachusetts Institute of Technology, have sought to determine how contracts can encourage mutually beneficial behavior. Their work has helped to shape the way companies pay senior executives and when governments decide to hire private companies to provide public services. Dr. Holmstrom’s work has focused on employment contracts. Companies would like employees to behave as if they owned the place: working hard, minding costs but also taking smart risks. Employees, on the other hand, would like to be paid as much as possible, for as long as possible, while working no harder than necessary. And performance is difficult to assess. Dr. Hart’s work has focused on a related issue: Contracts are incomplete instruction manuals. They cannot specify what should be done in every case. Instead, they must sti[CENSORED]te how decisions should be made. “His research provides us with theoretical tools for studying questions such as which kinds of companies should merge, the proper mix of debt and equity financing, and which institutions such as schools or prisons ought to be privately or publicly owned,” the Royal Swedish Academy of Sciences, which awarded the prize, said in a news release, referring to Dr. Hart. Dr. Holmstrom, speaking via an audio connection to a news conference hosted by the academy, said he had been “very surprised and very happy” to get the news. Asked how his day was going, he said there was “a sense of things being surreal.” Dr. Hart said he had hugged his wife, roused his son from sleep and spoken by phone with Dr. Holmstrom, whom he has known for years. Both scholars teach in Cambridge, Mass. “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,” Dr. Hart said. Dr. Holmstrom’s work, beginning in the late 1970s, presented evidence that companies should tie pay to the broadest possible evaluation of an employee’s performance. One important implication of his work is that it makes sense to wait and see how things turn out. That can be done by setting aside a portion of compensation. If the company benefits, the value of the bonus set aside can be increased. If the company does not, it can be reduced. Companies have turned increasingly to this kind of deferred compensation, particularly for senior executives, a trend Dr. Holmstrom noted with satisfaction Monday morning. Nobel Prize Winning Scientists Reflect on Nearly Sleeping Through the Life-Changing Call How eight winners got the word. He has also found that companies should tie pay to the share price of other firms in the same industry. It makes little sense to reward an executive for an increase that reflects broader economic factors, or to punish them for setbacks beyond their control. Much of Dr. Holmstrom’s subsequent work has focused on a variety of important wrinkles. He noted, for example, that measuring results could cause problems, too, by encouraging employees to focus on those parts of their jobs. Paying teachers based on test results, for example, couldlead them to devote less time to teaching other skills. This suggests that employers should balance fixed pay with performance incentives. One of Dr. Hart’s most important insights is that the power to make decisions is, in effect, a form of compensation. His work has shown that it makes sense to give the decision-making power to the parties whose performance is most difficult for the owners to assess and reward. Investors in a company, for example, are well served by giving money and control to the executives in exchange for the promise of a fixed return and the right to seize control if things go badly. This illuminates the underlying logic of most lending. “Incomplete-contract theory predicts that entrepreneurs should have the right to make most decisions in their firms as long as performance is good, but investors should have more decision rights when performance deteriorates,” the academy said in an explanation of Mr. Hart’s work. Who Are the Winners? Dr. Hart, 68, was born in London. He studied at University College London, Cambridge University and Warwick University, all in England, before receiving his Ph.D. in 1974 from Princeton. He has been a professor of economics at Harvard since 1993. Dr. Holmstrom, 67, was born in Helsinki, Finland. He received his Ph.D. in 1978 from Stanford and has been a professor of economics and management at M.I.T. since 1994. He previously taught at Northwestern and Yale. Who else has won a Nobel this year? ■ Yoshinori Ohsumi, a Japanese cell biologist, was awarded the Nobel Prize in Physiology or Medicine on Monday for his discoveries on how cells recycle their content, a process known as autophagy, a Greek term for “self-eating.” ■ David J. Thouless, F. Duncan M. Haldane and J. Michael Kosterlitz shared the Nobel Prize in Physics on Tuesday for their research into the bizarre properties of matter in extreme states. ■ Jean-Pierre Sauvage, J. Fraser Stoddart and Bernard L. Feringa shared the Nobel Prize in Chemistry on Wednesday for development of molecular machines, the world’s smallest mechanical devices. ■ President Juan Manuel Santos of Colombia was awarded the Nobel Peace Prize on Friday for pursuing a deal to end 52 years of conflict with the Revolutionary Armed Forces of Colombia, or FARC, the longest-running war in the Americas. 28 COMMENTS Who won the 2015 Nobel Memorial Prize in Economic Science? Angus Deaton was awarded last year’s prize for improving the data that shape public policy, including measures of wealth and poverty, savings and consumption, health and happiness. When will other prizes be announced? The Nobel Prize in Literature will be announced on Thursday in Sweden. Read about last year’s winner, Svetlana Alexievich. Correction: October 10, 2016 Because of an editing error, an earlier version of this article misidentified the professor who said he was “very surprised and very happy” to get the news of the Nobel award. It was Dr. Holmstrom, not “Dr. Holt.” (There is no Dr. Holt among the winners.) Also because of an editing error, the article misidentified the developer of rules for executive pay. It was Dr. Holmstrom, not the other winner, Dr. Hart.

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