Hayek and the Efficient Market Hypothesis are often seen as proposing a similar theory of prices. Hayek is seen as proposing to understand prices as information conveyer, incorporating inform...

Článok reflektuje historický vývoj skúmania hypotézy efektívnych trhov s vybranými stanoviskami metodológie vedy. Z vedeckého skúmania finančných trhov sa zdá, že aj napriek zdanlivým paradigmatickým prechodom medzi jednotlivými hypotézami o efektivite trhov sa úroveň vedeckého poznania menila kontinuálne, predovšetkým kvôli postupnej aplikácii nových analytických inštrumentov a nových metód testovania. Protichodné vedecké teórie vznikali a boli testované súbežne, rozdiel medzi ich prijatím a zamietnutím spočíval na sile empirických dôkazov poskytnutých v danom časovom období. Vývoj skúmaných teórií s postupne robustnejším metodickým rámcom (...) tak verne pripomína Toulminov evolučný model, pričom metodologické postoje Kuhna a Feyerabenda sa javia ako neuspokojivé. (shrink)

The efficient markets hypothesis has been the central proposition in finance for nearly thirty years. It states that securities prices in financial markets must equal fundamental values, either because all investors are rational or because arbitrage eliminates pricing anomalies. This book describes an alternative approach to the study of financial markets: behavioral finance. This approach starts with an observation that the assumptions of investor rationality and perfect arbitrage are overwhelmingly contradicted by both psychological and institutional evidence. In actual (...) financial markets, less than fully rational investors trade against arbitrageurs whose resources are limited by risk aversion, short horizons, and agency problems. The book presents and empirically evaluates models of such inefficient markets. Behavioral finance models both explain the available financial data better than does the efficient markets hypothesis and generate new empirical predictions. These models can account for such anomalies as the superior performance of value stocks, the closed end fund puzzle, the high returns on stocks included in market indices, the persistence of stock price bubbles, and even the collapse of several well-known hedge funds in 1998. By summarizing and expanding the research in behavioral finance, the book builds a new theoretical and empirical foundation for the economic analysis of real-world markets. (shrink)

The efficient markets hypothesis has been the central proposition in finance for nearly thirty years. It states that securities prices in financial markets must equal fundamental values, either because all investors are rational or because arbitrage eliminates pricing anomalies. This book describes an alternative approach to the study of financial markets: behavioral finance. This approach starts with an observation that the assumptions of investor rationality and perfect arbitrage are overwhelmingly contradicted by both psychological and institutional evidence. In actual (...) financial markets, less than fully rational investors trade against arbitrageurs whose resources are limited by risk aversion, short horizons, and agency problems. The book presents and empirically evaluates models of such inefficient markets. Behavioral finance models both explain the available financial data better than does the efficient markets hypothesis and generate new empirical predictions. These models can account for such anomalies as the superior performance of value stocks, the closed end fund puzzle, the high returns on stocks included in market indices, the persistence of stock price bubbles, and even the collapse of several well-known hedge funds in 1998. By summarizing and expanding the research in behavioral finance, the book builds a new theoretical and empirical foundation for the economic analysis of real-world markets. (shrink)

We develop a framework for assessing security market quality, relating five elements of market design to three metrics of market integrity and two metrics of market efficiency. We empirically implement this integrity–efficiency MQ framework by testing a hypothesis that trade-based ramping manipulation at the close raises execution costs on 24 security markets worldwide. Estimating a simultaneous equations model of ramping incidence, spreads, and the probability of deploying real-time surveillance, we show that quoted bid-ask spreads are (...) positively related to the incidence of MTC across seven liquidity deciles. The magnitude is economically significant; improving market integrity by cutting MTC in half reduces spreads 6–11 %. Allowing direct market access in conjunction with RTS, conducting auctions at the close, and developing regulations that require surveillance, all reduce MTC and thereby lower spreads, assuring better market integrity and enhancing market efficiency. Introducing circuit breakers or prohibiting shorts poses integrity–efficiency tradeoffs. (shrink)

This article analyses the current state of empirical legal research in the law and the regulation of financial markets. It aims to provide a brief survey of the main work done either by lawyers or by others but which is pertinent to the operation of law and regulation. It focuses on six main areas of research and debates. These are the debates on the efficient markets hypothesis and mandatory disclosure rules in securities regulation; studies on behavioralism and their (...) impact on disclosure as a tool for protecting investors; studies on the impact of rules relating to market misconduct on market development; research into the relationship between legal rules and securities market development; evidence of the unintended impacts of regulation; and research into the dynamics of financial market regulatory regimes. Finally, this article mentions that understanding the general context in which law and regulation operates deepens our understanding of the nature, potential, and limits of law and regulation themselves. (shrink)

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. (shrink)

This review essay of Economics Rules situates Dani Rodrik’s contribution with respect to the 2007–2008 global economic crisis. This financial meltdown, which the eurozone did not fully recover from before the Covid-19 pandemic, led to soul- searching among economists as well as a call for heterodox economic approaches. Yet, over the past decade, instead the economics profession has maintained its orthodoxy. Rodrik’s Economics Rules offers a critique of the economics profession that is castigating but mild. It calls for economists to (...) use more and diverse models without becoming wedded to any single model or an overarching vision. Yet Rodrik ratifies many of the benchmark models standard to orthodox economics and provides little ground for a fundamental rethinking of the discipline. This essay analyses the conservatism underlying Rodrik’s approach, which upholds general equilibrium theory and rational expectations underlying the efficient market hypothesis. It argues that the economics discipline’s scope-creep to maintain its applicability to all human decision-making, and its acceptance of all-inclusive utility functions, crowds out moral sentiments and civic virtue. Thus. it argues that rather than urging economists simply to be more cautious in their application of models to address particular social concerns, instead economists must recognise their discipline’s inherent limitations. (shrink)

Efficient markets are alienating if they inhibit us from recognizably caring about one another in our productive activities. I argue that efficient market behaviour is both exclusionary and fetishistic. As exclusionary, the efficient marketeer cannot manifest care alongside their market behaviour. As fetishistic, the efficient marketeer cannot manifest care in their market behaviour. The conjunction entails that efficient market behavior inhibits care. It doesn’t follow that efficient market behavior is (...) vicious: individuals might justifiably commit to efficiency because doing so serves the common good. But efficient market systems nevertheless have significant opportunity costs. The discussion yields a range of desiderata for non-alienated economic organization. (shrink)

Market inefficiency is a latent concept, and it is difficult to be measured by means of a single indicator. In this paper, following both the adaptive market hypothesis and the fractal market hypothesis, we develop a new time-varying measure of stock market inefficiency. The proposed measure, called composite efficiency index, is estimated as the synthesis of the most common efficiency measures such as the returns’ autocorrelation, liquidity, volatility, and a new measure based on the (...) Hurst exponent, called the Hurst efficiency index. To empirically validate the indicator, we compare different European stock markets in terms of efficiency over time. (shrink)

The Efficient Market Hypothesis often seems to suggest only that most people cannot outguess the financial markets. But the originator of the hypothesis, Eugene Fama, made the stronger claim that people cannot outguess the financial markets because financial-market prices are correct: They incorporate all known information accurately. This view omits the role that human traders’ interpretations of information must play if the information is to prompt them to buy or sell. Buyers and sellers disagree about (...) the meaning of current information, so at least half of them must be wrong. Bringing in many more (but equally fallible) people to predict the future does not somehow make their (collective) answer “right.” This is a logical disproof of the Fama hypothesis, but the inherently speculative nature of financial markets makes its empirical falsification (or verification) ambiguous if not impossible. The hypothesis must therefore be considered an unscientific article of faith. (shrink)

The Efficient Market Hypothesis often seems to suggest only that most people cannot outguess the financial markets. But the originator of the hypothesis, Eugene Fama, made the stronger claim that people cannot outguess the financial markets because financial-market prices are correct: They incorporate all known information accurately. This view omits the role that human traders’ interpretations of information must play if the information is to prompt them to buy or sell. Buyers and sellers disagree about (...) the meaning of current information, so at least half of them must be wrong. Bringing in many more (but equally fallible) people to predict the future does not somehow make their (collective) answer “right.” This is a logical disproof of the Fama hypothesis, but the inherently speculative nature of financial markets makes its empirical falsification (or verification) ambiguous if not impossible. The hypothesis must therefore be considered an unscientific article of faith. (shrink)

Sharpe’s ratio is the most widely used index for establishing an order of priority for the portfolios to which the investor has access, and the purpose of this investigation is to verify that Sharpe’s ratio allows decisions to be made in investment portfolios considering different financial market conditions. The research is carried out by autoregressive model of the financial series of returns using Sharpe’s ratio for evaluations looking over the priority of financial assets which the investor can access while (...) observing the effects that can cause autocorrelated series in evaluation measures for financial assets. The results presented in this study confirm the hypothesis proposed in which Sharpe’s ratio allows decisions to be made in the selection of investment portfolios under normal conditions thanks to the definition of a robustness function, whose empirical estimation shows an average 73% explanation of the variance in the degradation of the Spearman coefficient for each of the performance measures; however, given the presence of autocorrelation in the financial series of returns, this similarity is broken. (shrink)

This paper examines the normative ideas flowing from the contemporary theories that make up the New Finance. These theories include the Irrelevance Theorem, Efficient Market Hypothesis, Capital Asset Pricing Model, Options Pricing Model, and Agency Theory. The behavioral consequences that would ensue if everyone took the normative precepts of the New Finance seriously are subjected to a Kantian analysis to determine their ethical implications. It is concluded that the corporate world in the New Finance is a place (...) where the firm can select any operating and financial strategies that it wishes, and the investors will respond immediately through a combination of homemade portfolio diversification, clever option positions, and carefully constructed agency relationships, all of which results in a pervasive nihilism. Recommendations are offered on how these features of the New Finance might be avoided or moderated. (shrink)

Academic and corporate research departments alike face a crucial dilemma: to exploit known frameworks or to explore new ones; to specialize or to innovate? Here I show that these two conflicting epistemic desiderata are sufficient to explain pluralistic ignorance and its boom-and-bust-like dynamics, exemplified in the collapse of the efficient markets hypothesis as a modern risk management paradigm in 2007. The internalist nature of this result, together with its robustness, suggests that pluralistic ignorance is an inherent feature rather (...) than a threat to the rationality of epistemic communities. (shrink)

Economic forecasting is famously unreliable. While this problem has traditionally been blamed on theories such as the efficient market hypothesis or even the butterfly effect, an alternative explanation is the role of money – something which is typically downplayed or excluded altogether from economic models. Instead, models tend to treat the economy as a kind of barter system in which money's only role is as an inert medium of exchange. Prices are assumed to almost perfectly reflect the (...) 'intrinsic value' of an asset. This paper argues, however, that money is better seen as an inherently dualistic phenomenon, which merges precise number with the fuzzy concept of value. Prices are not the optimal result of a mechanical, Newtonian process, but are an emergent property of the money system. And just as quantum physics has its uncertainty principle, so the economy is an uncertain process which can only be approximated by mathematical models. Acknowledging the dynamic and paradoxical qualities of money changes our ontological framework for economic modelling, and for making decisions under uncertainty. Applications to areas of risk analysis, forecasting and modelling are discussed, and it is proposed that a greater appreciation of the fundamental causes of uncertainty will help to make the economy a less uncertain place. (shrink)

This article argues that modern finance should be an important object of attention. Particularly worthy of study are three demarcations: the changing disciplinary boundary of economics, the distinction between private and public knowledge, and the legal and cultural demarcation between legitimate trading and gambling. The balance between what Barnes calls N-type and S-type terms in finance is different from, for example, that in physics, but that is no criticism of finance theory: the activities of those who disbelieve finance theory’s (...) class='Hi'>efficient market hypothesis probably make the hypothesis more true. The case of Black-Scholes-Merton option pricing theory is drawn on to argue that the loops of self-reference intrinsic to S-terms seem predominantly performative: they increase the truth of finance theory’s typical assumptions. S-loops in the financial markets do not always promote stability, however, as is shown here by a case study of the fate of the hedge fund, Long-Term Capital Management. (shrink)

George Soros makes an important analytical contribution to understanding the concept of reflexivity in social science by explaining reflexivity in terms of how his cognitive and manipulative causal functions are connected to one another by a pair of feedback loops (Soros, 2013). Fallibility, reflexivity and the human uncertainty principle. Here I put aside the issue of how the natural sciences and social sciences are related, an issue he discusses, and focus on how his thinking applies in economics. I argue that (...) standard economics assumes a ‘classical’ view of the world in which knowledge and action are independent, but that we live in a complex reflexive world in which knowledge and action are interdependent. I argue that Soros's view provides a reflexivity critique of the efficient market hypothesis seen as depending on untenable claims about the nature of random phenomena and the nature of economic agents. Regarding the former, I develop this critique in terms of Cauchy distributions; regarding the latter I develop it in terms of rational expectations and rational addiction reasoning. (shrink)

This forum contribution addresses two major themes in de Goede’s original essay on ‘Financial security’: (1) the relationship between stable markets and the proverbial ‘security dilemma’; and (2) the development of new decision-technologies to address risk in the post-World War II period. Its argument is that the confluence of these two themes through rational choice theory represents a fundamental re-evaluation of the security dilemma and its relationship to the rule of law governing market relations, ushering in an era of (...) perpetual physical and financial insecurity. (shrink)

In recent studies, numerous anomalies against the weak and semi-strong-forms of efficient market hypothesis have been found insignificant after controlling the small-firm effect. We investigate whether the insider trading anomaly, a major anomaly against the strong-form of EMH, can survive after excluding small firms with a novel data set and document several new findings. We find a substantially larger number of insider purchases than sales, while the average volume of insider sales is much higher than the average (...) volume of insider purchases. Echoing recent US studies, we find that insider sales generate more abnormal returns than insider purchases do. We find much lower abnormal returns from insider trading than documented in the literature and the associated trading costs, which suggests that the market efficiency of individual stocks may depend on their sizes, and even the strong-form of EMH holds to a larger extent than previously recognized. (shrink)

The Market Failures Approach (MFA) is one of the leading theories in contemporary business ethics. It generates a list of ethical obligations for the managers of private firms that states that they should not create or exploit market failures because doing so reduces the efficiency of the economy. Recently the MFA has been criticised by Abraham Singer on the basis that it unjustifiably does not assign private managers obligations based on egalitarian values. Singer proposes an extension to the (...) MFA, the Justice Failures Approach (JFA), in which managers have duties to alleviate political, social, and distributive inequalities in addition to having obligations to not exploit market failures. In this paper I describe the MFA and JFA and situate them relative to each other. I then highlight a threefold distinction between different types of obligations that can be given to private managers in order to argue that a hybrid theory of business ethics, which I call the MFA +, can be generated by arguing that managers have obligations based on efficiency and duties based on equality to the extent that these latter obligations do not lead to efficiency losses. This argument suggests a novel theoretical option in business ethics, elucidates the issues that are at stake between the MFA and the JFA, and clarifies the costs and benefits of each theory. (shrink)

In economics and in the social sciences, the study of decision making of the single individual is an important preliminary step to provide a sound foundation for the analysis of equilibria in economic and social systems. Neuroeconomic analysis of the process has been a recent fruitful development in this direction. In the more recent past a new direction of research has emerged, studying the interplay of the decision making of the single individual with the economic and social environment that surrounds (...) him. We review some of the results in this field, both theoretical and experimental, and suggest that a closer development of these two methods of research will be necessary in the future. (shrink)

This is a systematic evaluation of the main arguments for and against the market as an instrument of social organization, balancing efficiency and justice. It links the distinctive approaches of philosophy and economics to this evaluation.

Does the level of marketing activity in a country contribute to societal well-being or quality of life? Does economic efficiency also play a positive role in societal well-being? Does economic efficiency also moderate or mediate the marketing activity effect on societal well-being? Marketing activity refers to the pervasiveness of promotion expenditures and number of retail outlets per capita in a country. Economic efficiency refers to the extent to which the economy is unhampered by corruption, burdensome government regulation, and a large (...) informal economy. We used secondary data from the World Bank and other statistical sources to answer these questions. Our study findings suggest that both marketing activity and economic efficiency contribute positively to societal well-being, and that economic efficiency plays more of a mediator than moderator role between marketing activity and societal well-being. The public policy implication of this study is that increases in marketing activity and economic efficiency in countries characterized as low on both dimensions should significantly increase the quality of life in those countries. (shrink)

There has been considerable debate over regulated organ markets. Especially current markets, where people sell one of their kidneys while still alive, have received increased attention. Futures markets remain an interesting and under-discussed alternative specification of a market-based solution to the organ shortage. Futures markets pertain to the sale of the right to procure people’s organs after they die. There is a wide range of possible specifications of the futures market. There are, however, some major unaddressed efficiency concerns. (...) This article presents this class of concerns and discusses the implication for organ futures markets. It identifies a number of inefficiency sources pertaining to crowding out, bad organs, costs and missed opportunities, family refusals, moral hazard and strength of the provided incentive. However, a complete assessment of futures market requires better knowledge regarding the potential reaction from donors, families and health professionals. (shrink)

Both fairness and efficiency are important considerations in market design and regulation, yet many regulators have neither defined nor measured these concepts. We develop an evidencebased policy framework in which these are both defined and measured using a series of empirical proxies. We then build a systems estimation model to examine the 2003–2011 explosive growth in algorithmic trading on the London Stock Exchange and NYSE Euronext Paris. Our results show that greater AT is associated with increased transactional efficiency and (...) reduced information leakage in top quintile stocks. For less liquid stocks, manipulation at the close declines. We also document the tradeoff between reduced spreads and increased manipulation or information leakage following the introduction of MiFID1. (shrink)

Both fairness and efficiency are important considerations in market design and regulation, yet many regulators have neither defined nor measured these concepts. We develop an evidencebased policy framework in which these are both defined and measured using a series of empirical proxies. We then build a systems estimation model to examine the 2003–2011 explosive growth in algorithmic trading on the London Stock Exchange and NYSE Euronext Paris. Our results show that greater AT is associated with increased transactional efficiency and (...) reduced information leakage in top quintile stocks. For less liquid stocks, manipulation at the close declines. We also document the tradeoff between reduced spreads and increased manipulation or information leakage following the introduction of MiFID1. (shrink)

This book presents startling evidence that state monopolies can produce better outcomes than the free market. It provides an empirical comparison of the property insurance market in five European countries: Britain, Spain, France, Switzerland, and Germany. The market and cost structures of insurers in each country are described, and particular features of each market and the outcomes for customers examined. The regulatory frameworks vary widely from country to country and so do the market outcomes, both (...) in terms of premium level and in terms of available insurance cover.In view of the increase in major floods and other forms of natural damage over the last decades, the non-availability of insurance cover in many competitive insurance systems is likely to become a major political issue. This book shows that state monopoly is an adequate policy response. Competitive insurance systems are shown to provide incomplete cover at a substantially higher cost. In mixed systems, where the private sector can obtain reinsurance from the state the state tends to end up paying most of the costs while the private insurance companies keep most of the premium income.The book will be of interest to academic economists interested in privatization, regulation, the theory of the firm, and insurance; Policy-makers concerned with regulation and privatization; Insurance companies, regulators, and analysts. (shrink)

Basic science -- Experiment -- Null hypothesis statistical testing -- Social science: psychology -- Social science: economics -- Behavioral economics -- "Efficient" markets -- Summing up.

This article argues that the field of asset pricing theory is undergoing a scientific revolution in Kuhnian terms. The orthodox view is one of determinate change in causal processes and inherent stability whereby financial markets, left unfettered, allocate nearly perfectly society's scare capital. However, decades of mounting anomalous evidence against the implications of stable causal processes perpetuated by conventional models based on efficient markets and the rational expectations hypothesis have paved the way for alternative avenues of research. Although (...) various approaches are being developed, the imperfect knowledge economics class of models has emerged as a potential new paradigm in the field of macro-finance. By stopping short of fixing in advance the specification of individual forecasting behavior and the causal process, the IKE class of models has been able to reconcile many of the puzzles found within the literature on asset price behavior and risk. (shrink)

This dissertation abstract and reflection commentary present the work of Dr. Andrea Liesen. The dissertation examines the informational efficiency of financial markets to price the systematic risk stemming from climate change for European companies. The abstract provides an overview of the underlying theory, introduces the development of hypotheses, the method applied, and data gathered, as well as selected implications of results. The reflection commentary discusses the author’s views of the research process as a junior scholar.

This article reviews and criticizes Joseph Heath’s market failures approach (MFA) to business ethics. Our criticism is organized into three sections. First, we argue that, even under the ideal assumptions of perfect competition, when markets generate Pareto-efficient distributions, Heath’s approach does not rule out significant harms. Second, we show that, under nonideal conditions, the MFA is either too demanding, if efficiency is to be attained, or not sufficiently demanding, if the goal of Pareto efficiency is abandoned. Finally, we (...) argue that Heath’s appeal to regulations and specific moral requirements as a remedy for market failures is unlikely to safeguard efficiency and exposes a number of general worries regarding the moral force of the MFA. We end this article with a constructive suggestion on how to adjust the MFA to avoid these problems while preserving its contractualist and Paretian spirit. (shrink)

In The Political Limits of Environmental Regulation: Tracking the Unicorn, Bruce Yandle identifies some of the key weaknesses of federal environmental regulation, including its regressive effects, its tendency to better serve selected political interests than the cause of environmental protection, and the EPA's failure to follow sensible priorities. Additional problems may also be cited, including the tendency to exclude citizens? voices from deliberations regarding the degree of pollution control. But Yandle's conclusion regarding the likely superiority of decentralized and market?sensitive (...) alternatives to centralized regulation is overstated. Any such alternatives necessarily will continue to be grounded in relatively uniform national standards. Moreover, in the context of American political economy, market?based controls would continue to deny many citizens real voice and choice. The quest continues to be for the combination of controls that best preserves both the environment and liberty. (shrink)

Due to the shortage of organs, it has been proposed that the ban on organ sales is lifted and a market-based procurement system introduced. This paper assesses four prominent proposals for how such a market could be arranged: unregulated current market, regulated current market, payment-for-consent futures market, and the family-reward futures market. These are assessed in terms of how applicable prominent concerns with organ sales are for each model. The concerns evaluated are that organ (...) markets will crowd out altruistic donation, that consent to sell organs is invalid, that sellers will be harmed, and that commodification of organs will affect human relationships in a negative way. The paper concludes that the family-reward futures market fares best in this comparison but also that it provides the weakest incentive to potential buyers. There is an inverse relationship between how applicable prominent critiques are to organ market models and the increase in available organs they can be expected to provide. (shrink)

Moriarty argues that the Market Failures Approach to business ethics is inapplicable to “real world” problems, because it treats “market failure” as a failure to achieve Pareto efficiency. Depending upon how it is applied, Pareto efficiency is either trivially easy to satisfy or else so demanding that no real-world market could ever satisfy it. In this Commentary, I argue that Moriarty overstates these difficulties. The regulatory structure governing markets is best understood as an attempt to maximize the (...) number of Pareto-improving exchanges that occur. There is no reason to think business self-regulation cannot be guided by the same normative-conceptual framework. (shrink)

: Workers generally face higher levels of pollution and risk in their workplace than members of the public. Economists justify the double standard (for workplace versus public exposures to various pollutants) on the grounds of the compensating wage differential (CWD). The CWD, or hazard-pay premium, is the increment in wages, all things being equal, that workers in hazardous environments receive, as compared to other workers. Economists defend the CWD by asserting that workers willingly trade safety for extra money. This essay (...) (1) examines the theory behind the CWD, (2) presents and evaluates economists' Market-Efficiency Argument for the CWD, (3) offers several reasons for questioning the CWD, and (4) applies the Market-Efficiency Argument to a real-world case, that of U.S. nuclear workers. The essay concludes that this argument fails to justify the CWD, at least in the case of U.S. nuclear workers. (shrink)

Workers generally face higher levels of pollution and risk in their workplace than members of the public. Economists justify the double standard on the grounds of the compensating wage differential . The CWD, or hazard-pay premium, is the increment in wages, all things being equal, that workers in hazardous environments receive, as compared to other workers. Economists defend the CWD by asserting that workers willingly trade safety for extra money. This essay examines the theory behind the CWD, presents and evaluates (...) economists' Market-Efficiency Argument for the CWD, offers several reasons for questioning the CWD, and applies the Market-Efficiency Argument to a real-world case, that of U. S. nuclear workers. The essay concludes that this argument fails to justify the CWD, at least in the case of U. S. nuclear workers. (shrink)