The role that so-called quants play in the financial world is analogous to the role batfish play in keeping coral reefs tidy. Just as batfish do not construct the reef but are essential to its health, quants do not create the structure financial markets depend on but do preserve the conditions that make markets function. So it would be misleading to suggest that quants were responsible for this summer's meltdown in the subprime-mortgage market or for the broader troubles that followed (see "The Blow-Up").

The functioning of financial markets relies on the general acceptance of certain assumptions. One of the most important is that the market will not sustain an opportunity for someone to have a free lunch. That is, although arbitrage opportunities will arise, market forces will eliminate them. As Fischer Black and Myron Scholes demonstrated in 1973 with their seminal model for determining the value of a stock option, the "no arbitrage" assumption provides individuals with a rational basis for putting a fair price on a variety of financial instruments. Thus, it is essential that the assumption be correct, and an important role of the quant is to make sure that it is. By scrutinizing financial data, quants spot arbitrage opportunities and alert their employers to act before others have a chance to do the same.