The Physics of Wall Street: a brief History of Predicting the Unpredictable

“A century and a half later, two men . . .”: the narrative history of the founding 
of the Prediction company is from Bass (1999). Additional biographical details con-
cerning the founders of the Prediction company come from Bass (1985, 1999), Gleick 
(1987), Kelly (1994a, b), and Kaplan (2002), as well as interviews and e-mail exchanges 

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Notes 
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243
with doyne farmer and others knowledgeable about the early history of the company.
131 “In Packard’s words . . .”: the expression “the edge of chaos” comes from Pack-
ard (1988).
132 “As head of the Manhattan Project . . .”: for more on frank oppenheimer, see 
cole (2009). for more on J. robert oppenheimer, see Bird and Sherwin (2005), conant 
(2005), and Pais (2006), as well as the references given above on the Manhattan Project: 
Baggott (2009), rhodes (1995), Jones (1985), and Groves (1962).
132
“. . . the Washington times-Herald reported . . .”: this was in the July 12, 1947, 
issue of the newspaper.
133 “. . . a young graduate student named Tom Ingerson”: the story of Ingerson, 
oppenheimer, farmer, and Packard is from Bass (1985, 1999).
133
“Jobs at the top universities were filled . . .”: for an example of the kind of rec-
ommendation I have in mind, see Wheeler (2011). this letter is the origin of the quote 
“best men” in the next sentence.
134 “. . . Silver City was a paradigm Western mining town”: this background on 
Silver city is from Wallis (2007).
136 “. . . first developed by a man named Edward Lorenz”: the biographical and 
historical details concerning Lorenz and the history of chaos theory are from Gleick 
(1987) and Lorenz (1993).
138 “. . . the work of two physicists named James Yorke and Tien-Yien Li . . .”: the 
article is Li and Yorke (1975).
139 “. . . the so-called butterfly effect . . .”: the paper is Lorenz (2000). Lorenz never 
used the metaphor of a butterfly flapping its wings, though he sometimes used a similar 
metaphor involving a seagull.
139
“. . . Farmer through reading A. H. Morehead . . .”: farmer read Morehead 
(1967); Packard read thorp (1966).
143 “. . . where the ball lands is sensitive to the initial conditions . . .”: Although 
there is some controversy concerning just what should count as a truly chaotic system, 
virtually everyone would agree that roulette is not chaotic. the reason is that the ball 
and wheel always come to rest in a small number of possible configurations, and so there 
is a strong sense in which all initial conditions lead to a small number of possible final 
states. But there is a precise mathematical sense in which roulette is “almost” chaotic, 
since if you ignore loss of energy from things like friction, the system becomes chaotic. 
for more on what it means for a system to be chaotic, see, for instance, Strogatz (1994) 
or Guggenheimer and Holmes (1983).
143
“. . . the Dynamical Systems Collective and the Chaos Cabal”: In fact, they 
published papers with the dynamical Systems collective as their “official” affiliation: for 
instance, see Packard et al. (1980).
144 
“. . . these attractors have a highly intricate fractal structure”: In addi-
tion to Strogatz (1994) and Guggenheimer and Holmes (1983), see Mandelbrot (2004b).
144
“The Collective’s most important paper . . .”: this is “Geometry from 
a time Series” (Packard et al. 1980).

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t h e p h y s i c s o f wa l l s t r e e t
146 
“The Santa Fe Institute hosted its first conference on economics . . .”: 
the proceedings of these conferences were published as Anderson et al. (1988), Arthur 
et al. (1997), and Blume (2006).
148 “Things got even better after the new York times . . .”: the article was Broad 
(1992).
149