2013 - Nobel Prize in Economic Sciences

Eugene Fama

The 2013 Nobel Prize in Economic Sciences was awarded to Eugene Fama, Lars Peter Hansen, and Robert Shiller for their empirical analysis of asset prices. Essentially, all three converge on the idea that although prices are completely unpredictable in the short run, they become more predictable over longer time periods. Eugene Fama’s contributions were already discussed in the section titled “1965—Efficient Markets.” To summarize, although market efficiency implies a random daily movement of asset prices, the returns that are realized over long periods of time reflect the risks of those firms and those risks are embedded in prices by market  participants.

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