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An economist who, with Fischer Black, derived the equation that let markets put a rational price on financial options for the first time, work that became the mathematical foundation of the modern derivatives industry. He shared the 1997 Nobel Memorial Prize in Economic Sciences with Robert Merton for it. The following year, as a principal at the hedge fund Long-Term Capital Management, he watched the same discipline that built his reputation fail to anticipate the market conditions that brought the fund down.