The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It Read Online Free PDF

secretary had warned him that the busy professor had only a few minutes to spare.
    Thorp spat out his blackjack results as quickly as he could and showed Shannon his paper. Shannon was impressed and said that Thorp had made a significant theoretical breakthrough. He agreed to submit the paper, which was called “A Winning Strategy for Blackjack.” But he had one suggestion.
    “I think you might want to change the title.”
    “Okay,” Thorp said, confused. “Why?”
    “The Academy can be a bit stodgy. And this title has a bit too much of a whiff of the casino. How about ‘A Favorable Strategy for Twenty-One’? That should be boring enough to pass the smell test.”
    Thorp agreed, and his few minutes were up. As he stood, Shannon asked, “Are you working on anything else in the gambling area?”
    Thorp paused. He’d kept his roulette research largely secret, and he hadn’t worked on it for months. But maybe Shannon would find it interesting.
    “I’ve been conducting some studies of the game of roulette,” he said, “and have had some … interesting results.”
    “Really?” Shannon said, his eyes lighting up. He gestured for Thorp to sit down again. “Continue.”
    Several hours later, Thorp left Shannon’s office into the darkening November night.
    Thorp started paying regular visits to Shannon’s home later that November as the two scientists set to work on the roulette problem. Shannon called his home “Entropy House,” a nod to a core concept in information theory, borrowed from the second law of thermodynamics. The law of entropy essentially means everything in the universe will eventually turn into a homogenous, undifferentiated goop. Ininformation theory, Shannon used entropy as a way to discover order within the apparent chaos of strings of seemingly random numbers.
    Shannon’s three-story wooden house overlooked the Mystic Lakes, several miles northwest of Cambridge. One look indoors told Thorp why Shannon likened it to a theory about the inexorable slide of the universe into utter randomness. It was a disorderly “gadgeteer’s paradise,” as Thorp later described it, packed with electronic and mechanical contraptions. Shannon was obsessed with automatons, machines that mimic human behavior, and he was especially fond of creating mechanical juggling dolls and coin tossers. He was a notorious unicyclist and impressed visitors by navigating a long tightrope stretched across his yard. One visitor was astounded by Shannon’s daughter, who could ride a unicycle and skip rope at the same time. Shannon for a time was obsessed with trying to calculate how small one could make a unicycle and still ride it.
    Science fiction writer Arthur C. Clarke visited Shannon’s house a number of times. A device Shannon called the “ultimate machine” left him unnerved. “Nothing could be simpler,” Clarke later wrote. “It is merely a small wooden casket, the size and shape of a cigar box, with a single switch on one face. When you throw the switch, there is an angry, purposeful buzzing. The lid slowly rises, and from beneath it emerges a hand. The hand reaches down, turns the switch off and retreats into the box. With the finality of a closing coffin, the lid snaps shut, the buzzing ceases and peace reigns once more. The psychological effect, if you do not know what to expect, is devastating. There is something unspeakably sinister about a machine that does nothing—absolutely nothing—except switch itself off.”
    Thorp and Shannon ordered a regulation roulette wheel from Reno for $1,500 and put it on a dusty slate billiard table. To parse its motion, they clocked it to the hypnotic pulse of a flashing strobe light. To time the ball, they would depress a switch each time it made one revolution around the wheel. The switch also triggered the strobe, marking where the ball stood at the moment the switch was hit. This let Thorp and Shannon gauge how well they were timing the ball, since it showed them how