During his career he has made important contributions to complex systems, chaos, artificial life, theoretical biology, time series forecasting and econophysics.

While a graduate student he led a group that called itself Eudaemonic Enterprises and built the first wearable digital computer, which was used to beat the game of roulette.

[2] Scout activities included searching for an abandoned Spanish goldmine to fund a mission to Mars, a road trip to the Northwest Territories and backcountry camping in the Barranca del Cobre.

The program included a floating-point package, a sequencer to perform the calculation, and an operating system that functioned with toe inputs and vibrating outputs.

This combined with their fear of violence at the hands of the casinos, so that they never played for high stakes and failed to realize the large sums they originally dreamed of.

[citation needed] Their most important contribution was a method for state space reconstruction, that made it possible to visualize and study chaotic attractors based only on a single time series.

[6] In his PhD thesis in 1981 Farmer showed how varying a parameter of an infinite dimensional system could give rise to a sequence of successively more complicated chaotic attractors, resembling the transition to turbulence.

[9][10] After finishing his doctorate in 1981, Farmer took a post-doctoral appointment at the Center for Nonlinear Studies at Los Alamos National Laboratory and received an Oppenheimer Fellowship in 1983.

In 1991 Farmer gave up his position at Los Alamos, reunited with Norman Packard and graduate school classmate James McGill, and co-founded the Prediction Company.

The trading strategy that was developed was an early version of statistical arbitrage, and made use of a variety of signals that derived from processing essentially all quantitative inputs related to the US stock market.

Farmer left Prediction Company in 1999 for the Santa Fe Institute, where he did interdisciplinary research at the interface of economics and complex systems, developed a theory of market ecology and was one of the founders of econophysics.

The market food web is supported by fundamental economic activities, such as demand for liquidity, lending to the real economy and risk diversification.

Fabrizio Lillo and Farmer observed that there are long periods where the orders flowing into the market are much more likely to be to buy than to sell, and vice versa, with correlations decaying very slowly as a power law.

[32][33] Recently, in a paper in collaboration with J. McNerney, J. Savoie, F. Caravelli and V. Carvalho, it was shown that the position of an industry in the global production network is an important determinant of its long term growth.

[35][36] In a separate effort, Asano et al. have shown how extending a standard macroeconomic model by assuming that households make their savings decisions by copying each other leads to behavior that resembles an endogenous business cycle.

Farmer and Packard's work on roulette, along with their adventures in the casinos of Nevada, has been featured in the 2004 Breaking Vegas documentary series, "Beat the Wheel".