Adaptive Markets: Financial Evolution at the Speed of Thought
by Andrew W. Lo  (Author)

About the Author
Andrew W. Lo is the Charles E. and Susan T. Harris Professor at the MIT Sloan School of Management and director of the MIT Laboratory for Financial Engineering. He is the author of Hedge Funds and the coauthor of A Non-Random Walk Down Wall Street and The Econometrics of Financial Markets (all Princeton). He is also the founder of AlphaSimplex Group, a quantitative investment management company based in Cambridge, Massachusetts.

About this book
Half of all Americans have money in the stock market, yet econo-mists can't agree on whether investors and markets are rational and efficient, as modern financial theory assumes, or irrational and inefficient, as behavioral econo-mists believe―and as financial bubbles, crashes, and crises suggest. This is one of the biggest debates in economics and the value or futility of investment management and financial regulation hang on the outcome. In this groundbreaking book, Andrew Lo cuts through this debate with a new framework, the Adaptive Markets Hypothesis, in which rationality and irrationality coexist.
Drawing on psychology, evolutionary biology, neuroscience, artificial intelligence, and other fields, Adaptive Markets shows that the theory of market efficiency isn't wrong but merely incomplete. When markets are unstable, investors react instinctively, creating inefficiencies for others to exploit. Lo's new paradigm explains how financial evolution shapes behavior and markets at the speed of thought―a fact revealed by swings between stability and crisis, profit and loss, and innovation and regulation.
A fascinating intellectual journey filled with compelling stories, Adaptive Markets starts with the origins of market efficiency and its failures, turns to the foundations of investor behavior, and concludes with practical implications―including how hedge funds have become the Galápagos Islands of finance, what really happened in the 2008 meltdown, and how we might avoid future crises.
An ambitious new answer to fundamental questions in economics, Adaptive Markets is essential reading for anyone who wants to know how markets really work.

Brief contents
Introduction
Chapter 1. Are We All Homo economicus Now?
Chapter 2. If You’re So Smart, Why Aren’t You Rich?
Chapter 3. If You’re So Rich, Why Aren’t You Smart?
Chapter 4. The Power of Narrative
Chapter 5. The Evolution Revolution
Chapter 6. The Adaptive Markets Hypothesis
Chapter 7. The Galapagos Islands of Finance
Chapter 8. Adaptive Markets in Action
Chapter 9. Fear, Greed, and Financial Crisis
Chapter 10. Finance Behaving Badly
Chapter 11. Fixing Finance
Chapter 12. To Boldly Go Where No Financier Has Gone Before
Color Plates
Notes
References
Acknowledgments
Index

Pages: 504 pages
Publisher: Princeton University Press; 1st Edition edition (May 2, 2017)
Language: English
ISBN-10: 9780691135144
ISBN-13: 978-0691135144