Efficient markets: fact and fiction

In this clip Michael D. Goldberg talks about the efficient market hypothesis, a talk given at the King’s Institute for the inaugural conference of the Institute for New Economic Thinking (INET), a group financed by legendary investor George Soros.

This video has a behavioural slant to it, and there is a strong focus on irrationality, herding, and other behavioural aspects of the markets.

Personally I’m not convinced that we can turn our back on the efficiency of the markets, nor that we can necessarily undo or limit the inherent weakness in any market, any blockade or regulatory restriction has a tendency to fall victim to circumvention of various sorts. However, there are growing bodies of work that point out the weaknesses of markets, and in this area the behaviourists are streets ahead of the curve in understanding the key points of market movements that are difficult to comprehend because they don’t act the way we think that they would or should.

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