Musings on Accounting Research by Steve

Home » Current thoughts » This just in . . . . Thaler wins Nobel Prize in Economics

This just in . . . . Thaler wins Nobel Prize in Economics


I get quite a chuckle out of this announcement.  Way back in 1989 I took a finance doctoral seminar, where I challenged some of the professor’s then almost religious beliefs in market efficiency!!!!  On the final exam, I started my answer to the first question with a quote from Debondt and Thaler 1985!!  Do you know how hard it is to have the Professor pick up your exam paper, glance at the start of your answer and start laughing . . . . . . . Well I do 🙂

Well almost 30 years later who is laughing now????  It was so obvious to me based on real world experience with investing that markets were often not efficient (1987 stock market crash in October was recent in my mind during that finance course) no matter how weakly one defined efficiency, that information was not processed costlessly, that individual systematic biases had to be reflected in markets, and that Lord Keynes (of Keynesian economics fame) had to have something right when he based his theories on, in part, “the animal spirits of the markets”!

So lets see, that makes Herbert Simon, Daniel Kahneman and Richard Thaler all Nobel Prize winners in economics!!!!  Too bad Amos Tversky had not lived long enough for him to be awarded it as well . . . . . .

For social and behavioral types, a day to celebrate!!!!

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