Efficient-Market Hypothesis Yielded $300 Million Donation

The University of Chicago Graduate School of Business is being renamed the University of Chicago Booth School of Business. The reason is a $300 Million donation from David G. Booth, the founder and chief executive of Dimensional Fund Advisors. Booth, who's been highly successful in his business, attributes much of his success to the university. His business is largely grounded in efficient-market hypothesis, which was, to a large extent, developed at the U. of Chicago Graduate School of Business.

Basically, the efficient-market hypothesis states that prices on traded assets reflect all available information. Thus, no piece of information can be used in order to gain an edge on the market, since that information is already accounted for in the price. No trader can outperform the market, other than by luck.

There are some obvious problems to this hypothesis, and I'll use this piece of news as a starting point for a series of entries on them.
The New York Times on the donation


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