In chapter 7, however, I draw on the econometric literature on option pricing to note that after the 1987 crash the fit between the Black-ScholesMerton model and patterns of market prices deteriorated markedly. A "volatility skew" or "smile" at odds with Black-Scholes emerged, and it seems to be durable; it has not subsequently diminished or vanished. Option theory has left its permanent imprint on the options markets: the theory is embedded in how participants talk and in technical devices that are essential to their markets. But what is performed in patterns of prices in those markets is no longer classic option-pricing theory.

Donald MacKenzie, An Engine, Not a Camera, loc. 150