Black-Scholes option pricing won the 1997 Nobel Prize
Evidence
The theory of option pricing developed by Black and Scholes (1973) and Merton (1973) was a crucial breakthrough that won the 1997 Nobel Prize for Scholes and Merton (Black died in 1995). — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 24
Categorization
- XREF: Grounds the famous Black-Scholes model, standard in finance, with its 1997 Nobel award.
Related
- Economists favored Black-Scholes-Merton for its minimal unobservable parameters and efficient-market grounding. (similarity 0.85)
- Black-Scholes legitimized options despite fitting prices only approximately (similarity 0.84)
- Black-Scholes-Merton pricing fit observed options data only approximately at launch. (similarity 0.84)
- All later option-price models are consistent refinements of Black-Scholes-Merton (similarity 0.84)
- Black-Scholes pricing rests on idealized no-friction market assumptions. (similarity 0.83)
- Black and Scholes converged on option pricing through shared technique rather than joint insight. (similarity 0.83)
- Pre-Black-Scholes option models relied on unmeasurable parameters (similarity 0.82)
- The Black-Scholes model reduces to a known physics equation solvable by hand (similarity 0.82)
- The Black-Scholes methodology reshaped economists’ and regulators’ thinking beyond derivatives. (similarity 0.82)
- The Black-Scholes formula contains no risk parameter, implying risk-neutral pricing. (similarity 0.82)
- Realistically, no unaided human could calculate a Black-Scholes option price by hand (similarity 0.82)
- The Black-Scholes theory reframed options trading as legitimate efficient pricing rather than gambling. (similarity 0.81)
- Black-Scholes-Merton theory shaped exchange fortunes before markets changed to match it. (similarity 0.81)
- Option price must equal the cost of a continuously adjusted replicating portfolio. (similarity 0.81)
- Option market prices initially diverged from the Black-Scholes model but converged (similarity 0.81)