Being a first-time author (and kind of an idiot), I didn't pay attention to the jacket copy for my book until it was too late. The actual copy isn't bad at all, but I spent a couple of hours last week rewriting it to make it more timely, only to discover that it was too late to make such big changes. So here's what I wrote. (The "celebrated journalist" bit was in the original, and I left it there. Enough parties, and it will be true.)
The efficient market hypothesis—long part of academic folklore but codified in the 1960s at the University of Chicago—has evolved into a powerful myth. It has been the driver of trillions of investing dollars, the inspiration for index funds and vast new derivatives markets. In its strongest form, the theory holds that the decisions of millions of investors, all digging for information and striving for an edge, inevitably add up to rational, perfect markets. That belief has crumbled.
Celebrated journalist Fox introduces a new wave of scholars who no longer teach that investors are rational or that markets are always right. Many now agree with Yale professor Robert Shiller that efficient market theory “represents one of the most remarkable errors in the history of economic thought.” Today the theory is giving way to new hypotheses of market behavior growing out of psychology, physics, evolutionary biology—and even traditional economics. In his landmark intellectual history, Fox uncovers the new ideas that may drive markets in the century ahead.