IDEAS home Printed from https://ideas.repec.org/h/pal/palchp/978-1-137-28656-7_3.html
   My bibliography  Save this book chapter

The Vision Ahead

In: The Medium of Contingency

Author

Listed:
  • Elie Ayache

Abstract

This book attempts to explain how any derivative pricing tool worthy of that name should work in the market. It attempts to understand what the market is, through the way in which the pricing tool works in the market. Recall that the pricing technology is both at one with the immemorial and immanent matter of the market and transcendent relative to the market — it is an a priori and apodictic stance — because of the element of design that is inherent in the technology. Recall that this point of view of the technology is what grants us access to the definition of the market. How a derivative pricing tool should work in the market is, first, by using probability theory and dynamic replication and, second, by recognizing that the matter that it is dealing with, the market of contingent claims, is precisely lodged outside any framing by probability theory or any fixed framework of states of the world. The regime-switching model will be the perfect illustration of this paradox when used as a derivative pricing technology and, accordingly, it will be our model for any derivative pricing technology.

Suggested Citation

  • Elie Ayache, 2015. "The Vision Ahead," Palgrave Macmillan Books, in: The Medium of Contingency, chapter 2, pages 30-45, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-28656-7_3
    DOI: 10.1007/978-1-137-28656-7_3
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palchp:978-1-137-28656-7_3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.