Economist Eugene Fama: ‘Efficient markets is a hypothesis. It’s not reality’
When asked about his views of Richard Thaler the behavioral economist and Nobel Prize winner also at the Booth School, Fama stated, “We agree on the empirical data, but we disagree on the interpretation. When people ask me what I think about behavioural economics, I just say that all of economics is a behavioural science. The difference is whether you think the behaviour is irrational or rational.”
When asked about whether markets are efficient, he said “The question is whether it is efficient for your purpose. And for almost every investor I know, the answer to that is yes. They’re not going to be able to beat the market so they might as well behave as if the prices are right,”
When asked about the recent rise in AI stocks, he stated “The world is betting that AI is going to rule the world and that Nvidia will have a near monopoly, but who really knows? Efficient markets is a hypothesis. It’s not reality. I can live with things like that, for sure.”
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