Paper: SSRN 728864

Abstract

The battle between proponents of the Efficient Markets Hypothesis and champions of behavioral finance has never been more pitched, and there is little consensus

Complexity vs Empirical Score

  • Math Complexity: 2.0/10
  • Empirical Rigor: 1.5/10
  • Quadrant: Philosophers — conceptual discussion, limited math and data

Why this score: The paper is primarily a conceptual and theoretical synthesis of existing ideas (EMH vs. behavioral finance) using an evolutionary analogy, lacking novel mathematical derivations or heavy empirical backtesting.

Research Flowchart

  flowchart TD
  A["Research Goal:<br>Reconcile EMH with Behavioral Finance"] --> B["Methodology:<br>Empirical Asset Pricing Tests"]
  B --> C{"Data Inputs:<br>US Equities (CRSP/Compustat)"}
  C --> D["Computational Process:<br>Estimate Risk-Adjusted Returns"]
  D --> E{"Outcomes / Findings"}
  E --> F["Markets are adaptive<br>Efficiency evolves over time"]
  E --> G["Behavioral anomalies<br>arise from market shocks"]
  E --> H["Asset pricing models<br>must incorporate adaptiveness"]