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Efficient Market Hypothesis

The New Palgrave Dictionary of Economics

Abstract

A capital market is said to be efficient if it fully and correctly reflects all relevant information in determining security prices. Formally, the market is said to be efficient with respect to some information set, ϕ, if security prices would be unaffected by revealing that information to all participants. Moreover, efficiency with respect to an information set, ϕ, implies that it is impossible to make economic profits by trading on the basis of ϕ.

This chapter was originally published in The New Palgrave: A Dictionary of Economics, 1st edition, 1987. Edited by John Eatwell, Murray Milgate and Peter Newman

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    Burton G. Malkiel

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    Malkiel, B.G. (1987). Efficient Market Hypothesis. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_42-1

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    • DOI: https://doi.org/10.1057/978-1-349-95121-5_42-1

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    1. Latest

      Efficient Markets Hypothesis
      Published:
      18 March 2017

      DOI: https://doi.org/10.1057/978-1-349-95121-5_42-2

    2. Original

      Efficient Market Hypothesis
      Published:
      03 November 2016

      DOI: https://doi.org/10.1057/978-1-349-95121-5_42-1

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