Louis Bachelier

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Louis Bachelier around 1890

Louis Bachelier (born March 11, 1870 in Le Havre , † April 26, 1946 in St-Servan-sur-Mer ) was a French mathematician . Today Bachelier is considered the founder of financial mathematics and, as a contemporary of Paul Lévy , Andrei Kolmogorow and Émile Borel, was one of the pioneers in the theory of stochastic processes .


Bachelier first graduated from high school in Caen . After his parents died early, he joined the family business, where he made his first acquaintance with the capital markets . At the age of 22 he began studying mathematics at the Sorbonne in Paris . Under his doctoral supervisor Henri Poincaré , he submitted his dissertation Théorie de la speculation in 1900 , in which he was looking for a probabilistic approach to share price movements.


As it turned out later, Bachelier (like one of his contemporaries, Vinzenz Bronzin from Trieste) was way ahead of his time with his ideas: In his work he was already operating with the Viennese trials , five years before Albert Einstein had them (apparently independent of Bachelier) discovered. He also gave explicit price formulas for standard ( put and call ) options and barrier options , 73 years before Black and Scholes succeeded.

Nevertheless, his approaches were unsuccessful: until the outbreak of the First World War in 1914, Bachelier hired himself as a scholarship holder and “freelance lecturer” at the Sorbonne and after the war accepted a professorship at the small university in Besançon . Entry into the Parisian mathematical elite of those days was denied to him, as his work was held in low esteem there because of its low mathematical rigor . Bachelier's excuse may be that the theory of this matter had not yet been developed at all - this only happened from around 1920, interestingly for the most part by those same Parisian circles. Paul Lévy in particular was not well-disposed towards Bachelier and accused him of (wrongly) serious mistakes, which in 1926 thwarted Bachelier's appointment at the University of Dijon . Lévy did not apologize for this mistake until 1931.

It was only after his death in 1946 that Bachelier was given the honor he deserved, when the visionary power of his ideas was gradually recognized. Today the International Mathematical Society bears the name of the Bachelier Finance Society in his honor .



  • Murad S. Taqqu: Bachelier and his times. A conversation with Bernard Bru. In: Helyette Geman, Dilip Madan, Stanley R. Pliska & Ton Vorst (Eds.): Mathematical Finance. Bachelier Congress 2000. Paris, June 29 – July 1, 2000. Springer, Berlin [u. a.] 2002, ISBN 3-540-67781-X ( PDF; 336 kB )

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