Great Economists Since Petty and Boisguilbert
Edited by Gilbert Faccarello and Heinz D. Kurz
Chapter 64: Louis Bachelier (1870–1946)
Louis Bachelier was born in Le Havre on 11 March 1870. He stopped his studies in 1889 on the death of his father and managed the family business. He enrolled in 1992 in the Paris Faculty of sciences and, in 1900, defended his thesis on ‘Théorie de la speculation’. His supervisor was Henri Poincaré. His academic career was difficult: he only obtained his first position in 1919 as lecturer at the University of Besançon. From there, he lectured in Dijon from 1922 to 1925 and in Rennes from 1925 to 1927. He became a professor in 1927 in Besançon and died on 26 April 1946 in Saint-Servan-sur-Mer. Bachelier was not aiming at “analysing the causes, which act on the stock prices; this research would be vain and would only lead to errors” (Bachelier 1914 : 176–7). The evolution of the stock prices cannot be forecast: it is submitted to the law of chance. Bachelier, however, does not discard determinism: the variations of stock prices have causes, but they are unknown and, worse, unknowable. One must thus reason as if chance alone was acting. But while the evolution of prices cannot be determined, it is perhaps possible to find the law of probability, which governs them. “It is precisely because one wants to ignore everything that it is possible to know” (ibid.). As an illustration of his research, Bachelier examines the 3 per cent rent, which was at that time the object of the greatest number of...
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