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

particularly important in physics because they proved to be a natural 
setting to look for “unified” theories, where what was being unified 
was the standard by which different quantities were compared in the 
theories. By 1973, it appeared that the three fundamental forces of par-
ticle physics — electromagnetism, the weak force, and the strong force
— had been unified into a single gauge-theoretic framework. this 
framework was called the Standard Model of particle physics. today, 
it is the single best-confirmed theory ever discovered, in any field. It is 
the very heart of modern physics.
Jobs in academia, especially the most desirable jobs as tenure-track 
professors, work on a fixed schedule. toward the end of each summer, 
students who are close to finishing their dissertations decide whether 
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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

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A New Manhattan Project 
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they are going to apply that year. If the student and his advisor decide 
that the dissertation is far enough along, the student begins to put to-
gether a dossier, including letters of support from faculty members, 
examples of the work that will go into the student’s dissertation, and a 
statement describing the student’s research interests. then, come fall, 
departments that are looking to hire new faculty members advertise 
their open positions, with applications due at the end of november. 
If you’re lucky, you will be interviewed by a hiring department, and 
if that goes well, you will be flown out to visit the schools that are in-
terested in you, to give a talk on your dissertation research. In many 
disciplines, including economics, the process is called “going on the 
market,” an apt phrase for what is essentially an academic cattle call. 
It’s an extraordinarily stressful process. More than anything else, an 
academic’s success on the market is what determines the trajectory of 
his career.
A graduate student’s research history and the quality of his disserta-
tion are crucial in determining whether he will get an academic job. 
But more important than either of these factors is the strength of the 
letters written in support of the student by the faculty. If famous, well-
respected professors say your research is good or important, that can 
make all the difference. each year, the Harvard economics department 
holds a faculty-wide meeting to determine which of that year’s batch 
of students are going to get the full-throated support of the university’s 
eminent economics faculty. the department goes through each of the 
candidates, and the student’s advisor brings the rest of the department 
up to speed on the student’s research and prospects. It’s a closed-door 
affair, and so only faculty members in the department know exactly 
what happens. But at the end of the meeting, some students emerge 
with the wind at their backs. When hiring departments start calling, 
these students get special endorsements. others aren’t so lucky.
Given the importance of her work, and the strong support of her 
advisor, Pia Malaney had every reason to expect that she would fare 
well in this process. everything was in place. But then came the oc-
tober jobs meeting. Afterward, she and Maskin met to discuss her job 
prospects, in light of the department’s determination. things no lon-
ger looked so good.

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Going into the meeting, Maskin was convinced that her thesis was 
terrific. But not everyone in the department agreed. one person in