Louis Jean-Baptiste Alphonse Bachelier (March 11, 1870 - April 28, 1946) was a French mathematician at the turn of the 20th century. He is credited with being the first person to model Brownian motion, which was part of his PhD thesis The Theory of Speculation, (published 1900). March 11 is the 70th day of the year in the Gregorian Calendar (71st in leap years). ... 1870 (MDCCCLXX) was a common year starting on Saturday (see link for calendar) of the Gregorian calendar or a common year starting on Monday of the 12-day-slower Julian calendar. ... April 28 is the 118th day of the year (119th in leap years) in the Gregorian Calendar, with 247 days remaining. ... 1946 (MCMXLVI) was a common year starting on Tuesday. ... Leonhard Euler is considered by many to be one of the greatest mathematicians of all time A mathematician is the person whose primary area of study and research is the field of mathematics. ... Three different views of Brownian motion, with 32 steps, 256 steps, and 2048 steps denoted by progressively lighter colors. ...

His thesis, which discussed the use of Brownian motion to evaluate stock options, is historically the first paper to use advanced mathematics in the study of finance. Thus, Bachelier is considered a pioneer in the study of financial mathematics and stochastic processes. A stock option is a specific type of option with a stock as the underlying instrument (the security that the value of the option is based on). ... Mathematical finance is the branch of applied mathematics concerned with the financial markets. ... In the mathematics of probability, a stochastic process can be thought of as a random function. ...

Early years

Bachelier was born in Le Havre. His father was a wine merchant and amateur scientist, and the vice-consul of Venezuela at Le Havre. His mother was the daughter of an important banker (who was also a writer of poetry books). Both of Louis' parents died just after he completed his bachelor's degree, forcing him to take care of his sister and three-year-old brother and to assume the family business, which effectively put his graduate studies on hold. During this time Bachelier gained a practical acquaintance with the financial markets. His studies were further delayed by military service. Bachelier arrived in Paris in 1892 to study at the Sorbonne, where his grades were less than ideal. Abbey of Graville, Le Havre Le Havre is a city in Normandy, northern France, on the English Channel, at the mouth of the Seine. ... A glass of red wine This article is about the alcoholic beverage. ... Look up amateur in Wiktionary, the free dictionary. ... This article or section does not cite its references or sources. ... The Chinese poem Quatrain on Heavenly Mountain by Emperor Gaozong (Song Dynasty) Poetry (from the Greek , poiesis, making or creating) is a form of art in which language is used for its aesthetic qualities in addition to, or in lieu of, its ostensible meaning. ... A bachelors degree (Artium Baccalaureus, A.B. or B.A.) is usually an undergraduate academic degree awarded for a course or major that generally lasts for three, four, or in some cases and countries, five or six years. ... The Sorbonne, Paris, in a 17th century engraving The historic University of Paris (French: ) first appeared in the second half of the 12th century, but was in 1970 reorganised as 13 autonomous universities (University of Paris I–XIII). ...

The Thesis

Academic career

There is a common misconception that Bachelier's thesis was not well-received and got poor marks, and that this resulted in his being continually blackballed in academics. However, the report of Henri Poincaré, his supervisor, on the thesis was rather positive, calling his approach to deriving Gauss' law of errors Look up Blackball in Wiktionary, the free dictionary. ... Jules Henri Poincaré (April 29, 1854 – July 17, 1912) (IPA: [][1]) was one of Frances greatest mathematicians and theoretical physicists, and a philosopher of science. ... Carl Friedrich Gauss was a German mathematician and physicist. ...

Even when bordering on a negative comment, Poincaré actually expressed interest in Bachelier's ideas. Jean Baptiste Joseph Fourier (March 21, 1768 - May 16, 1830) was a French mathematician and physicist who is best known for initiating the investigation of Fourier series and their application to problems of heat flow. ...

The thesis received a note of honorable, and was accepted for publication in the prestigious Annales Scientifiques de l’École Normale Supérieure. The fact that it did not receive a mark of très honorable, despite its ultimate importance, should not be considered to indicate a lack of appreciation for the thesis. Jean-Michel Courtault et al. point out in "On the Centenary of Theorie de la Speculation" that honorable was "the highest note which could be awarded for a thesis that was essentially outside mathematics and that had a number of arguments far from being rigorous."

For several years following the successful defense of his thesis, Bachelier further developed the theory of diffusion processes, and was published in prestigious journals. In 1909 he became a "free professor" at the Sorbonne. In 1914, he published a book, Le Jeu, la Chance, et le Hasard (Games, Chance, and Risk), that sold over six thousand copies. With the support of the Council of the University of Paris, Bachelier was given a permanent professorship at the Sorbonne, but World War I intervened and Bachelier was drafted into the French army as a private. After the war, he found a position in Besançon, replacing a regular professor on leave. When the professor returned in 1922, Bachelier replaced another professor at Dijon. He moved to Rennes in 1925, but was finally awarded a permanent professorship in 1927 at Besançon, where he worked for 10 years. The Sorbonne, Paris, in a 17th century engraving The Sorbonne today, from the same point of view The Sorbonne is frequently used in ordinary parlance as synonymous with the faculty of theology of Paris or the University of Paris in its entirety. ... The Sorbonne, Paris, in a 17th century engraving The historic University of Paris (French: ) first appeared in the second half of the 12th century, but was in 1970 reorganised as 13 autonomous universities (University of Paris I–XIII). ... Combatants Allied Powers: Russian Empire France British Empire Italy United States Central Powers: Austria-Hungary German Empire Ottoman Empire Bulgaria Commanders Nicholas II Aleksei Brusilov Georges Clemenceau Joseph Joffre Ferdinand Foch Robert Nivelle Herbert Henry Asquith Sir Douglas Haig Sir John Jellicoe Victor Emmanuel III Luigi Cadorna Armando Diaz Woodrow... City flag City coat of arms Motto: Utinam (Latin: If God wills) Citadel Vauban of Besançon Location Coordinates Time Zone CET (GMT +1) Administration Country France Region Franche-Comté Department Doubs (25) Intercommunality Grand Besançon Mayor Jean-Louis Fousseret  (PS) (since 2001) City Statistics Land area¹ 65. ... Street in the center of Dijon Arc de triomphe known as the Porte Guillaume, on Place Darcy in the center of Dijon Dijon and suburbs Cathédrale St Bénigne - Dijon Wikimedia Commons has media related to: Dijon Dijon ( ) is a city in eastern France, the préfecture (administrative capital... Some medieval houses, such as these at Champ-Jacquet, can still be found in the center of Rennes. ...

It is true that Bachelier's academic career had faltered in places. Besides the setback that the war had caused him, Bachelier was blackballed in 1926 when he attempted to receive a permanent position at Dijon. This was due to a misinterpretation of one of Bachelier's papers by Professor Paul Pierre Lévy, who—to Bachelier's understandable fury—knew nothing of Bachelier's work, nor of the candidate that Lévy recommended above him. Lévy later learned of his error, and reconciled himself to Bachelier. Paul Pierre Lévy (September 15, 1886 - December 15, 1971) was a French mathematician who was active especially in probability theory, introduced martingales and Lévy flights. ...

Bachelier's work on random walks predated Einstein's celebrated study of Brownian motion by five years. In mathematics, computer science, and physics, a random walk, sometimes called a drunkards walk, is a formalisation of the intuitive idea of taking successive steps, each in a random direction. ... Albert Einstein ( ) (March 14, 1879 – April 18, 1955) was a German-born theoretical physicist who is widely considered to have been one of the greatest physicists of all time. ... Three different views of Brownian motion, with 32 steps, 256 steps, and 2048 steps denoted by progressively lighter colors. ...

References

• Jean-Michel Courtault, et. al. "On the Centenary of Theorie de la Speculation". Mathematical Finance, Vol. 10, No. 3 (July 2000), 341-353
• "Louis Bachelier, fondateur de la finance mathématique" Louis Bachelier webpage at the Université de Franche-Comté, Besançon / France. Text in French.
• "Bachelier Finance Society"
• Philip Ball, Critical Mass Random House, 2004 ISBN 0-09-945786-5, pp238-242.