Robert C. Merton’s speech at the Nobel Banquet, December 10, 1997

Your Majesties, Your Royal Highnesses, Ladies and Gentlemen,

Myron Scholes, my colleague and dear friend of some thirty years, and I are deeply grateful to the Royal Swedish Academy of Sciences for this ultimate honour.

But for us this is also a bittersweet moment for we greatly miss our friend and collaborator, Fischer Black – especially so this special day. We are gratified that the Academy made it quite clear that, were Fischer still alive, he too would now be honoured.

Myron and I also share a wonderful array of family, friends, teachers, colleagues, and students. Among our teacher-mentors, especially two who are themselves laureates, Merton Miller for Myron, Paul Samuelson for myself. Myron wishes that his parents were alive to witness this moment, as I wish my mother were too. Happily, my father is.

And like all scientists, we too stand on the shoulders of giants, on the selective accumulation of prior knowledge. In our case, a most powerful legacy, ranging from the pioneering French mathematician, Louis Bachelier, to the all-knowing U.S. economist, Paul Samuelson.

Much has been written about the ramified effects of the options-pricing model on the world’s financial system. But, like other scientists, we had no practical objective. We simply found the options-pricing problem interesting. It was an engaging puzzle, a difficult challenge. And we know that just as the model helped shape the markets, the markets in turn helped shape the evolving model.

A final word: of all the many benefits conferred by the institution of the Nobel Prizes on the growth of science, not least is their according utmost recognition to still new and promising directions of inquiry, such as ours. For this too, we thank you.