Adaptive Markets
eBook - ePub

Adaptive Markets

Financial Evolution at the Speed of Thought

  1. English
  2. ePUB (mobile friendly)
  3. Available on iOS & Android
eBook - ePub

Adaptive Markets

Financial Evolution at the Speed of Thought

About this book

A new, evolutionary explanation of markets and investor behavior

Half of all Americans have money in the stock market, yet economists can't agree on whether investors and markets are rational and efficient, as modern financial theory assumes, or irrational and inefficient, as behavioral economists believe. The debate is one of the biggest in economics, and the value or futility of investment management and financial regulation hangs on the answer. In this groundbreaking book, Andrew Lo transforms the debate with a powerful new framework in which rationality and irrationality coexist—the Adaptive Markets Hypothesis. Drawing on psychology, evolutionary biology, neuroscience, artificial intelligence, and other fields, Adaptive Markets shows that the theory of market efficiency is 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 revealed by swings between stability and crisis, profit and loss, and innovation and regulation. An ambitious new answer to fundamental questions about economics and investing, Adaptive Markets is essential reading for anyone who wants to understand how markets really work.

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Key takeaways

AI-Generated Insights
Insight 1

Evaluate the foundational assumptions of the Efficient Market Hypothesis and behavioral economics regarding investor rationality and market efficiency. Formulate how the Adaptive Markets Hypothesis synthesizes these perspectives to explain financial market dynamics.

Insight 2

Analyze how principles from evolutionary biology, psychology, and neuroscience explain the adaptive nature of financial markets and investor decision-making. Explain the mechanisms through which fear, greed, and other cognitive processes influence market stability and instability.

Insight 3

Apply the Adaptive Markets Hypothesis to interpret historical financial events, including market crises, and to evaluate various investment strategies. Propose adaptive regulatory approaches informed by an evolutionary understanding of financial systems.

Information

Publisher
Princeton University Press
Year
2019
Print ISBN
9780691191362
Edition
2
eBook ISBN
9780691196800
Topic
Business
Subtopic
Finance
Index
Business

Table of contents

  1. Cover Page
  2. Title Page
  3. Copyright Page
  4. Dedication Page
  5. Contents
  6. Introduction
  7. Chapter 1. Are We All Homo economicus Now?
  8. Chapter 2. If You’re So Smart, Why Aren’t You Rich?
  9. Chapter 3. If You’re So Rich, Why Aren’t You Smart?
  10. Chapter 4. The Power of Narrative
  11. Chapter 5. The Evolution Revolution
  12. Chapter 6. The Adaptive Markets Hypothesis
  13. Chapter 7. The Galapagos Islands of Finance
  14. Chapter 8. Adaptive Markets in Action
  15. Chapter 9. Fear, Greed, and Financial Crisis
  16. Chapter 10. Finance Behaving Badly
  17. Chapter 11. Fixing Finance
  18. Chapter 12. To Boldly Go Where No Financier Has Gone Before
  19. Color Plates
  20. Afterword
  21. Notes
  22. References
  23. Acknowledgments
  24. Index

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Yes, you can access Adaptive Markets by Andrew W. Lo in PDF and/or ePUB format, as well as other popular books in Business & Finance. We have over 1.5 million books available in our catalogue for you to explore.