It's not quite true to say that most economists believe markets are efficient, especially as the economic notions of efficiency are not a single, simple concept. It's more accurate to say that an efficient market is a useful hypothetical basis from which to reason about markets.
That said, I'm interested in taking a look at this paper. On Tue, Oct 2, 2012 at 6:24 PM, Dan Bron <[email protected]> wrote: > Most economists believe that markets are efficient, and a lot of our financial > infrastructure is founded on this premise (the EMH). > > Most mathematicians believe that P≠NP, and it would be a bombshell in the math > world if it were proved false. > > The paper below by Philip Maymin [1] proves these two theories directly > contradict each other, and that only one can be true. > > In other words: If P≠NP, then the EMH is not true, and it will always be > possible to make risk-free money. But if the EMH is true, then the capital > markets are the perfect computing fabric, and can efficiently solve any > NP-hard computational problem. > > After reading the paper, and a little reflection, it's pretty obvious (almost > intuitive) that the EMH is very unlikely to be true, but the insight is quite > startling. > > -Dan > > [1] Markets are efficient if and only if P=NP > http://arxiv.org/abs/1002.2284v2 > > PS: You don't need to be versed in either economics or mathematics to read > and enjoy this paper. It's well-written, and introduces all the necessary > concepts in an accessible, digestible way. Thanks to Raul for bringing this > to my attention on Twitter (by retweeting Charles Stross, @cstross). > > > > > ---------------------------------------------------------------------- > For information about J forums see http://www.jsoftware.com/forums.htm -- Devon McCormick, CFA ^me^ at acm. org is my preferred e-mail ---------------------------------------------------------------------- For information about J forums see http://www.jsoftware.com/forums.htm
