Information in Financial Markets

In Mark Addis, Fernand Gobet & Peter Sozou (eds.), Scientific Discovery in the Social Sciences. Springer Verlag (2019)
  Copy   BIBTEX

Abstract

The concept of ‘information’ is central to our understanding of financial markets, both in theory and in practice. Analysing information is not only a critical part of the activities of many financial practitioners, but also plays a central role in the Efficient Market Hypothesis (EMH). The central claim of this paper is that different data can count as information in fi-nancial markets and that particular investors do not consider all of the available data. This suggests that firstly, saying the price of a stock should be $X once a particular piece of information has been incorporated in the price is only justifiable if we know that this information really is relevant for other investors. Sec-ondly, the EMH is often tested by looking at market behaviour after the release of information; again, this is only justified if we know that other market participants share the view that this is information. The purpose of this chapter is to suggest that there are good reasons for thinking that we do not know this. Finally, this chapter also suggests that bubbles in financial markets are best understood in terms of salience of information, rather than irrationality.

Other Versions

No versions found

Links

PhilArchive



    Upload a copy of this work     Papers currently archived: 98,109

External links

Setup an account with your affiliations in order to access resources via your University's proxy server

Through your library

Analytics

Added to PP
2019-09-13

Downloads
26 (#711,512)

6 months
7 (#589,429)

Historical graph of downloads
How can I increase my downloads?

Author's Profile

Catherine Greene
London School of Economics

References found in this work

No references found.

Add more references