Markets are efficient if and only if P=NP (2010)

Re:Markets are efficient if and only if P=NP (2010) by whoisburbansky on Wednesday October 21, 2020 @12:29AM (#24844741)

The efficient market hypothesis doesn't say anything about the amount of time it might take for markets to iron out inconsistencies and take into account new information; "the market can remain irrational longer than you can stay solvent." It's the sort of thing that's hard to falsify because you can always say "oh, it'll eventually become consistent." Given that, I don't think this fundamentally changes anything about "technicals," even if P!=NP, but my intuition a priori is also the same as yours, that "technicals" are mostly window dressing anyways.

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Re:Markets are efficient if and only if P=NP (2010) by na85 on Wednesday October 21, 2020 @12:32AM (#24844755)

>The efficient market hypothesis doesn't say anything about the amount of time it might take for markets to iron out inconsistencies and take into account new information

Actually it does. The central premise of the Efficient Market Hypothesis is that all relevant information is already priced in.

>"the market can remain irrational longer than you can stay solvent."

Irrational behaviour by uninformed investors is theoretically already priced in, if the market is efficient.

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Re:Markets are efficient if and only if P=NP (2010) by whoisburbansky on Wednesday October 21, 2020 @12:38AM (#24844775)

Taking that literally, it's clearly false; information can't affect prices faster than the speed of light.

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[dead]

Re:Markets are efficient if and only if P=NP (2010) by bawolff on Wednesday October 21, 2020 @07:19AM (#24846666)

We're literally talking about a paper comparing emh to np=p, isn't pointless pedantry the name of the game?

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Re:Markets are efficient if and only if P=NP (2010) by jabl on Wednesday October 21, 2020 @02:45AM (#24845335)

Ah, but here's an interesting topic for an ambitious research project, "Efficient relativistic markets". The proposal would score cross-disciplinarity brownie points in the evaluation committee.

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Re:Markets are efficient if and only if P=NP (2010) by hchasestevens on Wednesday October 21, 2020 @06:21AM (#24846373)

You might be surprised to learn that the well-known economist Paul Krugman wrote in the late 70s about trade in relativistic scenarios, see https://en.wikipedia.org/wiki/The_Theory_of_Interstellar_Tra... and http://www.standupeconomist.com/pdf/misc/interstellar.pdf (for the paper itself).

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Re:Markets are efficient if and only if P=NP (2010) by jabl on Wednesday October 21, 2020 @12:48PM (#24849581)

Ah, but of course. When you're not a subject matter expert what you think is a novel idea is something the actual experts have already investigated decades ago. sigh, oh well.

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Re:Markets are efficient if and only if P=NP (2010) by rocqua on Wednesday October 21, 2020 @08:57AM (#24847354)

I mean, in that sense the efficient market theory is immediately false, since someone must be the first to learn some new information and price it in.

Thing is, the hypothesis can be useful whilst being only approximately true. If it is true to with 0.1% then, in most cases, it is quite appropriate to model it as being perfectly true. And obviously, there are other cases where that model isn't useful. In those cases, it would probably still be useful to take the 0.1% number into account.

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