Metaphors, Models & Theories

14 Pages Posted: 22 Nov 2010 Last revised: 6 Dec 2010

Emanuel Derman

Columbia University

Date Written: November 22, 2010

Abstract

Theories deal with the world on its own terms, absolutely. Models are metaphors, relative descriptions of the object of their attention that compare it to something similar already better understood via theories. Models are reductions in dimensionality that always simplify and sweep dirt under the rug. Theories tell you what something is. Models tell you merely what something is partially like.

Keywords: financial models, theories, valuation, pricing

JEL Classification: G00, G12, G13

Suggested Citation

Derman, Emanuel, Metaphors, Models & Theories (November 22, 2010). Available at SSRN: https://ssrn.com/abstract=1713405 or http://dx.doi.org/10.2139/ssrn.1713405

Emanuel Derman (Contact Author)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States
212 854 9883 (Phone)

HOME PAGE: www.ederman.com

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