Robert C. Merton

Robert Cox Merton was born on July 31, 1944, in New York City, New York, United States. He is the son of the prominent sociologist Robert K. Merton. Robert C. Merton later becomes a distinguished American economist, recognized for his pioneering contributions to the development of the Black-Scholes-Merton model for pricing derivatives.

In 1970, Robert C. Merton earned his Ph.D. in economics from the Massachusetts Institute of Technology (MIT). His doctoral thesis addressed continuous-time finance, a field that he would continue to advance significantly throughout his career.

In 1973, Robert C. Merton, along with Fischer Black and Myron Scholes, published papers that would revolutionize the field of financial economics. Merton's paper 'Theory of Rational Option Pricing' complemented Black and Scholes’ work, resulting in the famous Black-Scholes-Merton model. This model provides a theoretical framework for assessing the value of options, a key instrument in risk management.

In 1979, Robert C. Merton joined the faculty of Harvard Business School. His academic work included teaching future business leaders and contributing to research in finance. At Harvard, Merton continued to explore and expand upon his work in financial economics, particularly in the areas of risk management and derivative pricing.

On October 15, 1997, Robert C. Merton was awarded the Nobel Prize in Economic Sciences, along with Myron Scholes, for their new method to determine the value of derivatives. Merton's work extended the theoretical understanding and practical tools available for dealing with financial risk, emphasizing his role in transforming modern financial economics.

In 1998, Robert C. Merton co-founded Long-Term Capital Management L.P. (LTCM), a hedge fund that utilized complex mathematical models to manage investment and trading risks. Despite early success, LTCM faced severe financial difficulties in 1998, leading to a bailout to prevent wider financial market turbulence.

In 2006, Robert C. Merton was involved in the launch of 'Finance: A Journal,' where he explored new dimensions of financial theory, practice, and education. This journal was intended to provide insights into the complex world of finance, highlighting Merton's ongoing contributions to both academic and practical financial applications.

In 2010, Robert C. Merton joined the MIT Sloan School of Management as a faculty member. His work at MIT focuses on advancing the understanding of finance and risk management, sharing his expertise with students and integrating innovative approaches into the curriculum.

On December 2, 2014, Robert C. Merton was awarded the Onassis Prize in Finance, which recognized his exceptional contributions to the field of financial economics. This prestigious award underscores Merton's influence in shaping modern financial theory and practice, particularly in the area of derivative pricing and risk management.

On August 28, 2017, Robert C. Merton published an influential article on pension reforms, discussing comprehensive solutions to improve retirement systems. His analysis offered critical insights into ensuring financial security for retirees through policy and structural changes, reflecting his commitment to applying academic knowledge to societal challenges.