Markets are, most likely, not efficient

This is a really interesting paper that throws a bit of a bombshell into
the old "markets are efficient" argument. It combines economic theory
and computational/information theory (excerpt w/ my additions in[]):

Perhaps the most famous question in the field of finance is: “Is the
market efficient?”

Perhaps the most famous question in the field of computer science is:
“Does P = NP?” [Do all questions that have an answer that can be
verified quickly also have a way of answering the question quickly].

The result of this paper is that these two questions are linked, and
furthermore, the answers to the two questions must be the same: markets
are efficient if and only if P = NP.

[The paper goes on to state that most economists (80%+) believe that P =
NP (markets are efficient), whereas most computer scientists (92%+)
believe that P != NP (markets are not efficient)]

Download link for the paper can be found here:

http://arxiv.org/format/1002.2284v2

-- manu

-- 
Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu Sporny)
Founder/CEO - Digital Bazaar, Inc.
blog: Meritora - Web payments commercial launch
http://blog.meritora.com/launch/

Received on Monday, 13 May 2013 18:51:50 UTC