How Efficient Is Sufficient: Applying the Concept of Market Efficiency in Litigation

摘要

The concept of market efficiency has been adopted by courts in a variety of contexts. Early on, market efficiency was treated as a yes or no question. Either market prices reflected all available information or they did not. However, that dichotomy is inconsistent with research in financial economics. As early as 1980, the work of Grossman and Stiglitz made it clear that markets could never reflect all available information. The proper way to think of market efficiency is as a continuum.