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Authors: Brian Kettell
Published by: Centre for Islamic Banking and Finance
Published in: 2001
Length: 17 pages
Data source: Generalised experience

Abstract

Financial economists are divided between those who believe that markets are efficient (EMH supporters) and those, applying the new discipline of behavioural finance, whose adherents believe that markets can best be explained by psychology rather than by the principles of rational behaviour, so favoured by adherents of efficient markets. This note puts together the arguments propounded by both EMH critics and supporters.

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Abstract

Financial economists are divided between those who believe that markets are efficient (EMH supporters) and those, applying the new discipline of behavioural finance, whose adherents believe that markets can best be explained by psychology rather than by the principles of rational behaviour, so favoured by adherents of efficient markets. This note puts together the arguments propounded by both EMH critics and supporters.

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