While accepting the $25,000 Chicago Mercantile Exchange Fred Arditti Innovation Award, William F. Sharpe said he's created a sort of portfolio-investment version of popular computer game The Sims.
"You can think of my simulator as like The Sims but without the visuals, the pizza and the sex," he said at the Jan. 18 award ceremony in Chicago.
"Since I get to create each simulated financial world, I can also see whether an equilibrium situation could be improved by the invention and introduction of new securities that people could trade with one another if they chose to do so.… In a fundamental sense, this is what innovative financial institutions (like the CME) do — create new securities and make it possible for people to trade them efficiently."
Mr. Sharpe, a Nobel laureate in economics as well as STANCO 25 Professor of Finance, emeritus, at Stanford University and a founder of Financial Engines Inc., Palo Alto, Calif., is the inaugural recipient of the award. He was selected for his role in the development of the capital asset pricing model and the Sharpe ratio for portfolio analysis.
The CME's Center for Innovation created the award to honor an individual or group whose innovative ideas have created significant change to markets, commerce or trade. The award is named after Mr. Arditti, former CME chief economist who was instrumental in developing the CME's widely traded eurodollar futures contract.