Merton, Robert Carhart

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Robert Carhart Merton, 1944–, American economist, b. New York, N.Y., Ph.D. Massachusetts Institute of Technology, 1970. He has taught at MIT (1970–88, 2010–) and Harvard (1988–2010). Merton influenced the development of the widely used Black-Scholes formula for pricing stock options and extended the formula, and along with Myron Scholes, he was awarded the Nobel Memorial Prize in Economic Sciences in 1997. (The work of Fischer Black, who died two years before the prize was awarded, also was acknowledged by the prize committee.) The formula contributed to the growth of the financial markets in the late 20th cent. Merton has made other contributions to economics, including a formula for determining how much income a person should invest and an extension of the capital asset pricing model. He has worked with financial companies as well, and in the 1990s participated along with Scholes in Long-Term Capital Management, a hedge fund whose near collapse in the late 1990s necessitated a Federal Reserve–led bailout and tarnished their reputations. He is the son of sociologist Robert K. Merton.