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Justin Wolfers and Richard T Holden

Nobel Prize Shows Both Wisdom and Madness of Crowds

Financial markets provide a useful reminder of just how humble we economists should be about our understanding of the world. The three winners of the 2013 Nobel Memorial Prize in Economic Sciences neatly capture this tension.

Eugene Fama is the intellectual godfather of the view that financial markets are efficient, while no one has done more than Robert Shiller to highlight their inefficiencies. Lars Peter Hansen developed statistical techniques that both sides have used to help resolve their differences.