In this paper it will be examined if markets are macro-inefficient and micro-efficient at the same time. In order to give a thorough understanding about efficient markets, there will be an overview in the following chapter. After that, the research question is discussed and managerial implication are given.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Efficiency of markets
- Discussion of the research question
- Implications for managerial decisions
- Conclusion
- References
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper critically evaluates the proposition that markets might be "macro-inefficient" but "micro-efficient". It aims to understand the implications of this proposition for managerial decisions by exploring the different forms of market efficiency and how they relate to micro and macro levels.
- The Efficient Market Hypothesis (EMH) and its different forms (weak, semi-strong, and strong)
- The relationship between market efficiency and the behavior of informed and noise traders
- The potential for market inefficiencies at both the micro and macro levels
- The impact of short selling and regulatory restrictions on market efficiency
- The implications of micro and macro-inefficiencies for managerial decision-making
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: Introduces the research question and provides an overview of the paper's structure.
- Efficiency of markets: Defines and explains the different forms of market efficiency, focusing on informational efficiency and the EMH. It discusses the assumptions and limitations of efficient markets, highlighting the role of investor behavior.
- Discussion of the research question: Explores the concepts of micro and macro-efficiency. It examines how individual securities can be efficiently priced while the aggregate market might exhibit inefficiencies. It discusses the role of informed investors and noise traders in creating these effects and explores potential situations where the micro-efficiency model breaks down. It also considers the implications of behavioral finance theory on market efficiency.
Schlüsselwörter (Keywords)
The paper focuses on the concepts of market efficiency, micro-efficiency, macro-inefficiency, informed investors, noise traders, short selling, behavioral finance, and the implications of market inefficiencies for managerial decision-making.
- Citation du texte
- Arno Hetzel (Auteur), 2018, Macro-inefficient but micro-efficient markets. Managerial implications, Munich, GRIN Verlag, https://www.grin.com/document/449817
