Adaptive markets

financial evolution at the speed of thought

483 pages

English language

Published Aug. 20, 2017

ISBN:
978-0-691-13514-4
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OCLC Number:
983461859

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"Half of all Americans have money in the stock market, yet economists can't agree on whether investors and markets are ration and efficient, as modern financial theory assumes, or irrational and inefficient, as behavioral economists believe - and as financial bubbles, crashes, and crises suggest. This is one of the biggest debates in economics, and the value or futility of investment management and financial regulation hang on the outcome. In this groundbreaking book, Andrew Lo cuts through this debate with a new framework, the Adaptive Markets Hypothesis, in which rationality and irrationality coexist. Drawing on psychology, evolutionary biology, neuroscience, artificial intelligence, and other fields, "Adaptive Markets" shows that the theory of marked efficiency isn't wrong but merely incomplete. When markets are unstable, investors react instinctively, creating inefficiencies for others to exploit. Lo's new paradigm explains how financial evolution shapes behavior and markets at the speed of thought - a fact …

4 editions

A Fantastic Finance Book with Extraneous Neuroscience/Psychology Chapters

The chapters of this book that deal with financial markets and how they operate are exceptional and insightful, detailing different aspects of how they work and contrasting this reality with past idealized versions of "efficient markets." Lo also offers an illuminating explanation of different recent financial crises and possible ways to mitigate them in the future. There are unfortunately a number of extraneous chapters on partially discredited/dated psychology and neuroscience phenomena. These add nothing to the rest of the book and are what you would find in an intro textbook in these topics ~25 years ago. If you skip these chapters the book is a must read. Highly recommend

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Subjects

  • Economics
  • Finance
  • Stock exchanges

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