Alternatives to the efficient market hypothesis: an overview
Purpose – The authors’ goal is to provide an overview and historical context for the various alternatives to the efficient market hypothesis (EMH) that have emerged over time. The authors found eight current alternatives that have emerged to address the EMH's flaws. Each of the proposed alterna...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2023-12-01
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| Series: | Journal of Capital Markets Studies |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/JCMS-04-2023-0014/full/pdf |
| _version_ | 1797400581899288576 |
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| author | Kingstone Nyakurukwa Yudhvir Seetharam |
| author_facet | Kingstone Nyakurukwa Yudhvir Seetharam |
| author_sort | Kingstone Nyakurukwa |
| collection | DOAJ |
| description | Purpose – The authors’ goal is to provide an overview and historical context for the various alternatives to the efficient market hypothesis (EMH) that have emerged over time. The authors found eight current alternatives that have emerged to address the EMH's flaws. Each of the proposed alternatives improves some of the assumptions made by the EMH, such as investor homogeneity, the immediate incorporation of information into asset values and the inadequacy of rationality to explain asset prices. Design/methodology/approach – To come up with the list of studies relevant to this review article, the authors used three databases, namely Scopus, Web of Science and Google Scholar. The first two were mostly used to get peer-reviewed articles while Google Scholar was used to extract articles that are still work in progress. The following words were used as the search queries; “efficient market hypothesis” and “alternatives to the efficient market hypothesis”. Findings – The alternatives to the EMH presented in this article demonstrate that market efficiency is a dynamic concept that can be best understood with a multidisciplinary approach. To better comprehend how financial markets work, it is crucial to draw on concepts, theories and ideas from a variety of disciplines, including physics, economics, anthropology, sociology and others. Originality/value – The authors comprehensively summarise the current state of the behavioural finance literature on alternatives to the EMH. |
| first_indexed | 2024-03-09T01:57:38Z |
| format | Article |
| id | doaj.art-4e24f429c9f84a5cb088d30347e578df |
| institution | Directory Open Access Journal |
| issn | 2514-4774 |
| language | English |
| last_indexed | 2024-03-09T01:57:38Z |
| publishDate | 2023-12-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | Journal of Capital Markets Studies |
| spelling | doaj.art-4e24f429c9f84a5cb088d30347e578df2023-12-08T13:20:27ZengEmerald PublishingJournal of Capital Markets Studies2514-47742023-12-017211112410.1108/JCMS-04-2023-0014Alternatives to the efficient market hypothesis: an overviewKingstone Nyakurukwa0Yudhvir Seetharam1School of Economics and Finance, University of the Witwatersrand, Johannesburg, South AfricaSchool of Economics and Finance, University of the Witwatersrand, Johannesburg, South AfricaPurpose – The authors’ goal is to provide an overview and historical context for the various alternatives to the efficient market hypothesis (EMH) that have emerged over time. The authors found eight current alternatives that have emerged to address the EMH's flaws. Each of the proposed alternatives improves some of the assumptions made by the EMH, such as investor homogeneity, the immediate incorporation of information into asset values and the inadequacy of rationality to explain asset prices. Design/methodology/approach – To come up with the list of studies relevant to this review article, the authors used three databases, namely Scopus, Web of Science and Google Scholar. The first two were mostly used to get peer-reviewed articles while Google Scholar was used to extract articles that are still work in progress. The following words were used as the search queries; “efficient market hypothesis” and “alternatives to the efficient market hypothesis”. Findings – The alternatives to the EMH presented in this article demonstrate that market efficiency is a dynamic concept that can be best understood with a multidisciplinary approach. To better comprehend how financial markets work, it is crucial to draw on concepts, theories and ideas from a variety of disciplines, including physics, economics, anthropology, sociology and others. Originality/value – The authors comprehensively summarise the current state of the behavioural finance literature on alternatives to the EMH.https://www.emerald.com/insight/content/doi/10.1108/JCMS-04-2023-0014/full/pdfEfficient market hypothesisBehavioural financeEconophysicsAsset pricing |
| spellingShingle | Kingstone Nyakurukwa Yudhvir Seetharam Alternatives to the efficient market hypothesis: an overview Journal of Capital Markets Studies Efficient market hypothesis Behavioural finance Econophysics Asset pricing |
| title | Alternatives to the efficient market hypothesis: an overview |
| title_full | Alternatives to the efficient market hypothesis: an overview |
| title_fullStr | Alternatives to the efficient market hypothesis: an overview |
| title_full_unstemmed | Alternatives to the efficient market hypothesis: an overview |
| title_short | Alternatives to the efficient market hypothesis: an overview |
| title_sort | alternatives to the efficient market hypothesis an overview |
| topic | Efficient market hypothesis Behavioural finance Econophysics Asset pricing |
| url | https://www.emerald.com/insight/content/doi/10.1108/JCMS-04-2023-0014/full/pdf |
| work_keys_str_mv | AT kingstonenyakurukwa alternativestotheefficientmarkethypothesisanoverview AT yudhvirseetharam alternativestotheefficientmarkethypothesisanoverview |