Journal of Economic Perspectives: Vol. 17 No. 1 (Winter 2003)


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The Efficient Market Hypothesis and Its Critics

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Malkiel, Burton G. 2003. "The Efficient Market Hypothesis and Its Critics ." Journal of Economic Perspectives, 17(1): 59-82.

DOI: 10.1257/089533003321164958


Revolutions often spawn counterrevolutions and the efficient market hypothesis in finance is no exception. The intellectual dominance of the efficient-market revolution has more been challenged by economists who stress psychological and behaviorial elements of stock-price determination and by econometricians who argue that stock returns are, to a considerable extent, predictable. This survey examines the attacks on the efficient market hypothesis and the relationship between predictability and efficiency. I conclude that our stock markets are more efficient and less predictable than many recent academic papers would have us believe.

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Malkiel, Burton G.


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