Edward Oakley Thorp (born August 14, 1932) is an American mathematics professor, author, hedge fund manager, and blackjack researcher.
He pioneered the modern applications of probability theory, including the harnessing of very small correlations for reliable financial gain.
Thorp is the author of Beat the Dealer, which mathematically proved that the house advantage in blackjack could be overcome by card counting.
[1] He also developed and applied effective hedge fund techniques in the financial markets, and collaborated with Claude Shannon in creating the first wearable computer.
Thorp went on to win scholarships by doing well in chemistry and physics competitions (one instance led him to meeting President Truman), ultimately electing to go to UC Berkeley for his undergraduate degree.
[6][8][9] Thorp started his applied research using $10,000, with Manny Kimmel, a wealthy professional gambler and former bookmaker,[10] providing the venture capital.
[9] News quickly spread throughout the gambling community, which was eager for new methods of winning, while Thorp became an instant celebrity among blackjack aficionados.
Due to the great demand generated about disseminating his research results to a wider gambling audience, he wrote the book Beat the Dealer in 1962 (substantially updated in 1966), widely considered the original guide to card counting,[11] which sold over 700,000 copies, a huge number for a specialty title which earned it a place in the New York Times bestseller list, much to the chagrin of Kimmel whose identity was thinly disguised in the book as Mr.
[17] Thorp wrote many articles about option pricing, Kelly criterion, statistical arbitrage strategies (6-parts series),[18] and inefficient markets.