Quarterly Journal of Austrian Economics

The Efficient Market Conjecture


Quarterly Journal of Austrian Economics 18, no. 4 (Winter 2015): 378–408

ABSTRACT: Although commonly misconstrued as a statement concerning the “correctness” of prices, the Efficient Market Hypothesis (EMH) is a statement about their informational content. The aftermath of the recent recession has brought renewed skepticism to EMH, even leading some to redefine it as the “inefficient” market hypothesis. We demonstrate that such a course of action is misguided, as it changes the nature of the input (i.e., the market) but not the truth value of the statement (i.e., whether markets are efficient). We outline further several logical fallacies of the Hypothesis which negate its usefulness. We conclude by showing that the EMH was never a hypothesis and as such is best considered a conjecture. As a conjecture, it is increasingly difficult to reconcile with market behavior in both theory and practice.

KEYWORDS: efficient markets, informational efficiency, EMH, equity returns


Campos Dias de Sousa, Ricardo Emanuel, and David Howden, “The Efficient Market Conjecture,” Quarterly Journal of Austrian Economics 18, no. 4 (Winter 2015): 378–408.

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