Efficient Markets Reconsidered

How financial markets work has long been the subject of debate between two academic camps: the efficient markets theorists and the behavioral economists. Into the breach stepped finance professor and author Andrew Lo, who joins Matt to discuss his efforts to bridge this ideological divide.

Instead of viewing financial markets as “a physical system like a mechanical clock,” says Lo, “we really need to look at it as an ecosystem with particular organic agents that are acting with each other.”

The implications of Lo’s work extend far beyond the ivory tower, to regular investors and society at large.

Andrew W. Lo is the Charles E. and Susan T. Harris Professor at the MIT Sloan School of Management and director of the MIT Laboratory for Financial Engineering.

Your host, Matt Miller, is the policy and communications advisor for Capital Group. An author and former Washington Post columnist, Matt was co-host of the public radio program Left, Right & Center.

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Related: (In U.S.) 4 Behavioral Tips to Help Investors Avoid Emotional Self-Sabotage

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