Robert C. Merton, John and Natty McArthur University Professor at Harvard Business School and the 1997 co-winner of the Nobel Memorial Prize in the Economic Sciences, recently received the Kolmogorov Medal from the University of London in recognition of his distinguished work in fields of research influenced by the renowned Russian mathematician Andrei N. Kolmogorov (1903-1987). Merton also delivered a lecture titled “Observations on the Science of Finance in the Practice of Finance: Past, Present, and Future.”
Merton’s research focuses on developing finance theory in the areas of capital markets and finance institutions. According to University of London Professor Alex Gammerman, “Andrei Kolmogorov is widely regarded as a founder of stochastic processes. One of the most spectacular applications of that theory is to the theory of pricing financial derivatives, which originated in the work of Robert Merton in collaboration with fellow Nobel laureate Myron Scholes and the late Fischer Black.”
When Merton’s Nobel was announced, Carliss Y. Baldwin, the William L. White Professor of Business Administration at Harvard Business School, remarked, “Few economists have contributed theories of such breadth and beauty; fewer still have seen their ideas put to such immediate practical use. Like Paul Samuelson, Bob Merton has changed the foundations on which the science of economics is built.”
In his prize lecture, Merton offered observations on the structural elements of the worldwide financial crisis, on needed financial regulatory changes, and on the important role of financial innovation and science in the future.
Merton is past president of the American Finance Association, a member of the National Academy of Sciences, and a fellow of the American Academy of Arts and Sciences. He joined the Harvard Business School faculty in 1988.