Market efficiency means prices fully reflect available information.

Evidence

That view was that financial markets were “efficient” in other words, that “prices always `fully reflect’ available information” (Fama 1970, p. 383). Drawing on a distinction suggested by his colleague Harry Roberts, Fama distinguished three meanings of “available information,” the first two of which correspond roughly to successive phases in the history of the relevant research. — Donald MacKenzie, An Engine, Not a Camera, 291

Categorization

• DEFINE: Defines the efficient-market hypothesis in its canonical Fama formulation, separating three nested senses of ‘available information.’
• XREF: connects to: Prices generate as well as transmit information through the market. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 68; The efficient market hypothesis and bubbles are logically compatible. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 777; Markets carry explicit traces of the specific pricing models they use — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 899 (+6 more)

Broader Connections

• Prices generate as well as transmit information through the market. #expands (0.85) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 68
• Financial pricing formulas actively construct the markets they purport to measure #complicates (0.85) — Max Haiven, Cultures of Financialization, 84
• Efficient-market theory holds stocks are interchangeable rights to income streams #expands (0.85) — Donald MacKenzie, An Engine, Not a Camera, 460
• Markets carry explicit traces of the specific pricing models they use #complicates (0.82) — Donald MacKenzie, An Engine, Not a Camera, 899
• The Efficient Market Hypothesis resists empirical falsification through the protective shield of auxiliary hypotheses #qualifies (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 753
• Market efficiency seemed sufficient for describing returns only briefly in the 1970s #qualifies (0.80) — Donald MacKenzie, An Engine, Not a Camera, 391
• The efficient market hypothesis and bubbles are logically compatible. #qualifies (0.78) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 777
• Even efficient-market theorists privately acknowledged mispricings existed. #complicates (0.78) — Donald MacKenzie, An Engine, Not a Camera, 1109
• Money functions as an equivalent-certainty that reduces the need for information #qualifies (0.72)