Elie Ayache

"Elie Ayache is the only person to present arguments about The Black Swan and rare events that I had not thought about. He does what philosophical inquiry has always done: to go the extra mile and look at the world in a deeply philosophical way." Nassim Nicholas Taleb, PhD, author of The Black Swan, Distinguished Professor, New York University Polytechnic Institute & Principal, Universa Investments. "Elie Ayache has uniquely straddled the down-to-earth world of money and complex financial derivatives and the abstract world of the mind and philosophy. Insightful and insane in equal measures, this book is not an easy read. I wouldn't recommend this for holiday reading on the beach but perhaps for while sitting in front of a log fire with a large Scotch, or probably several.??? Paul Wilmott, author of Frequently Asked Questions in Quantitative Finance October 19th 1987 was a day of huge change for the global finance industry. On this day the stock market crashed, the Nobel Prize winning Black-Scholes formula failed and volatility smiles were born, and on this day Elie Ayache began his career, on the trading floor of the French Futures and Options Exchange. Experts everywhere sought to find a model for this event, and ways to simulate it in order to avoid a recurrence in the future, but the one thing that struck Elie that day was the belief that what actually happened on 19th October 1987 is simply non reproducible outside 19th October 1987 - you cannot reduce it to a chain of causes and effects, or even to a random generator, that can then be reproduced or represented in a theoretical framework. The Blank Swan is Elie's highly original treatise on the financial markets – presenting a totally revolutionary rethinking of derivative pricing and technology. It is not a diatribe against Nassim Taleb's The Black Swan, but criticises the whole background or framework of predictable and unpredictable events – white and black swans alike – , i.e. the very category of prediction. In this revolutionary book, Elie redefines the components of the technology needed to price and trade derivatives. Most importantly, and drawing on a long tradition of philosophy of the event from Henri Bergson to Gilles Deleuze, to Alain Badiou, and on a recent brand of philosophy of contingency, embodied by the speculative materialism of Quentin Meillassoux, Elie redefines the market itself against the common perceptions of orthodox financial theory, general equilibrium theory and the sociology of finance. This book will change the way that we think about derivatives and approach the market. If anything, derivatives should be renamed contingent claims, where contingency is now absolute and no longer derivative, and the market is just its medium. The book also establishes the missing link between quantitative modelling (no longer dependent on probability theory but on a novel brand of mathematics which Elie calls the mathematics of price) and the reality of the market."

The End of Probability

The Blank Swan

In The Medium of Contingency Elie Ayache builds upon his ground-breaking book The Blank Swan, in exploring the intersection of philosophy and finance, introducing new notions of price and market. Inverting the received view, he now sees a creation of matter in both the market and its metaphysics, rather than pure speculation. Once recognized as the proper medium of contingency and disassociated from the probabilistic and statistical tools traditionally used to model it, the market can be thought as 'real', in a new sense of reality corresponding to the new sense of matter. To bring this new and original perspective, The Medium of Contingency builds on probability theory as first formalized by von Mises and Kolmogorov, and later revisited by Shafer and Vovk. It utilises the author's extensive experience in derivatives pricing technology and software, as well as his work in the philosophy of contingency and contingent claims, to propose a new philosophical interpretation of Brownian motion and of the Black-Scholes-Merton formula. Then it completes the overturning of the traditional view of the market by arguing that there should be no difference, ultimately, between an underlying asset and the derivative written on it. This book does not aim to change the market but the way we must think of it. It is the author's conviction that there can be no philosophy of the market, and consequently no thinking of it, without a philosophy of contingent claims and of derivative pricing. The book provides the missing piece, which the philosophy of probability cannot provide alone. Its scope, however, extends beyond the strict critique of financial mathematics, as it also, and perhaps most importantly, delivers the author's definitive treatment of the philosophically prominent and recently much discussed notion of contingency.

An Inverse View of the Market

The Medium of Contingency

Matthew Poole

Reza Negarestani

Robin MacKay

An unprecedented meeting of philosophical thought, financial markets, and the art world. Why has the concept of contingency taken on a marked importance both in contemporary philosophy and in contemporary art practice? And if this simultaneity derives from parallel problems met within the two different fields, what are their common roots? Beyond acknowledging the contingent nature of tradition, institutions, and practices, recent speculative philosophies of "absolute contingency" demand a radical revision of the ways in which we conceive of our interaction with unknowable materialities, and pose a challenge to both probabilistic management and process-driven affirmation of contingency. In an unprecedented meeting of philosophical thought, financial markets, and the art world, The Medium of Contingency explores how works of art write contingency into the present, and are in turn written by the contingency of their materials, and how these exchanges interact with other markets. From the mathematical instruments used to value financial derivatives to the nature of literary creation, from the market-making role of the curator to the "chemistry of openness," the contributors to this lively discussion draw out the startling consequences of a new figure of thought.

Elie Ayache

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