Adaptive Markets Hypothesis: A new point in Finance Evolution

Abstract

The purpose of this thesis is to look deeply into the present state of art of economy and finance, and try to link the major new theories that are emerging in recent years. This task is really hard because we have understood that each discipline has influence on the other, the interconnectedness between economy and math, biology, psychology, sociology etc.. is so dense and deep that to understand also the apparently simple events beyond economy, we have to take into account the complete environment in where the event occurs, studying all the participants and their relation. The starting point is to analyse an accepted and taught economics theory and then, to study new theories that can unify all the discordances of existing theories under a single model. I choose to start with the EMH, efficient market hypothesis, this is not a random choice, although it seems this topic is specific of financial world, i recognize in it a lot of arguments and assertations that engage with numerous other topics. Then it will be presented a possible reconciliation between the traditional theory of the markets and its critics, a new theory made by Professor Andrew Lo, the Adaptive Market Hypothesis, the scope of this thesis is to extend our view over the possible next steps and implication of finance world