Nobel Memorial Prize in Economic Sciences
The first prize in economics was awarded in 1969 to Ragnar Frisch and Jan Tinbergen "for having developed and applied dynamic models for the analysis of economic processes". In 2009, Elinor Ostrom became the first woman awarded the prize.
Black–Scholes model
Based on works previously developed by market researchers and practitioners, such as Louis Bachelier, Sheen Kassouf and Ed Thorp among others, Fischer Black and Myron Scholes demonstrated in the late 1960s that a dynamic revision of a portfolio removes the expected return of the security, thus inventing the "risk neutral argument". In 1970, after they attempted to apply the formula to the markets and incurred financial losses due to lack of risk management in their trades, they decided to focus in their domain area, the academic environment. After three years of efforts, the formula named in honor of them for making it public, was finally published in 1973 in an article entitled "The Pricing of Options and Corporate Liabilities", in the "Journal of Political Economy". Robert C. Merton was the first to publish a paper expanding the mathematical understanding of the options pricing model, and coined the term "Black–Scholes options pricing model". Merton and Scholes received the 1997 Nobel Memorial Prize in Economic Sciences for their work, the committee citing their discovery of the risk neutral dynamic revision as a breakthrough that separates the option from the risk of the underlying security. Although ineligible for the prize because of his death in 1995, Black was mentioned as a contributor by the Swedish Academy.