The Adaptive Markets Hypothesis: Market Efficiency from an Evolutionary Perspective

ArXiv ID: ssrn-602222 “View on arXiv”

Authors: Unknown

Abstract

One of the most influential ideas in the past 30 years is the Efficient Markets Hypothesis, the idea that market prices incorporate all information rationally a

Keywords: Efficient Markets Hypothesis, Market Efficiency, Asset Pricing, Informational Efficiency, Financial Theory, Equity

Complexity vs Empirical Score

• Math Complexity: 3.0/10
• Empirical Rigor: 2.0/10
• Quadrant: Philosophers
• Why: The paper proposes a conceptual framework (Adaptive Markets Hypothesis) to reconcile EMH and behavioral finance using evolutionary principles, but it lacks mathematical derivations, empirical data, or backtesting details, focusing instead on theoretical exposition and implications for practice.

  flowchart TD
    A["Research Goal:<br>Challenge EMH with<br>Evolutionary Perspective"] --> B["Methodology:<br>Literature Review &<br>Theoretical Framework"]
    B --> C["Input Data:<br>Historical Market Anomalies<br>& Behavioral Studies"]
    C --> D["Process:<br>Adaptive Markets Hypothesis<br>Integration (Lo 2004)"]
    D --> E["Key Findings:<br>1. Markets are adaptive<br>2. Efficiency varies<br>3. Profit opportunities<br>fluctuate with evolution"]