shamebear (shamebear) wrote in quants,

The rise of the Black-Scholes model

The Black-Scholes model for option pricing was presented in 1973 and has been widely applied in economics, to say the least. Today, it's easy to find competing models published in fields from economics to physics but Black-Scholes appear, to an outsider atleast, to be the standard.

Why is this? Its shortcomings are well known, why havn't traders and others employed different methods to try to gain a slight advantage over their peers? Was it alone on the scene in 1973 and has continued by tradition since then? Has it been ingrained in some curriculum or stock-market standard somewhere? Or is it simply still the best?
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