Random-walk prices and market efficiency transformed US finance in the 1950s-60s

Evidence

The third main strand in the transformation of the study of finance in the United States in the 1950s and the 1960s was the most general. It involved two closely related notions: that prices of stocks and similar securities follow a random walk, and that financial markets at least the main markets in the United States and similar countries are efficient. — Donald MacKenzie, An Engine, Not a Camera, 256

Categorization

• XREF: connects to: Random-walk ideas of security prices predate the 1950s by a century — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 257; The randomness of price changes was a foundational open problem in finance — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 463; Kendall’s random-walk findings sparked Samuelson’s turn to financial markets — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 283 (+2 more)

Broader Connections

• Kendall’s random-walk findings sparked Samuelson’s turn to financial markets #expands (0.85) — Donald MacKenzie, An Engine, Not a Camera, 283
• The randomness of price changes was a foundational open problem in finance #expands (0.78) — Donald MacKenzie, An Engine, Not a Camera, 463
• The efficient market hypothesis survived every empirical refutation and became finance orthodoxy #expands (0.75) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 758