Follow U.S. immigration and U.S. news reports: According to The Wall Street Journal, three scholars from the United States jointly received the Nobel Prize in Economic Sciences on Monday for their pioneering work in the functioning of financial markets, asset prices, and behavioral economics.
Eugene Fama, Peter Hansen, Robert Shiller
Eugene Fama, Peter Hansen, and Robert Shiller were awarded the 2013 Nobel Prize in Economic Sciences for their empirical analysis of asset prices.
The three were recognized for their different studies on how stocks and bonds are priced and why they are priced that way. Their research has reshaped portfolio management, contributed to the birth of index funds, and created fundamental tools for econometric analysis.
Fama, the oldest among the three, is regarded by many as the father of modern finance due to his research on the efficient market hypothesis in the 1960s. After achieving some success in stock selection, he discovered that when markets operate efficiently, asset prices reflect all recent information. Therefore, attempts to select stocks or predict market trends are often futile, and these findings helped facilitate the index fund industry.
However, twenty years later, Shiller found that in the long run, the short-term efficiency of markets does not persist. On the contrary, asset prices appear excessively volatile and cannot be justified by fundamental information. In short, Shiller discovered that there are numerous reasons for price fluctuations, many of which are not necessarily rational.
Hansen sought to test the predictability of markets and created widely used econometric tools. His Generalized Method of Moments (GMM) is continuously used for recession analysis, allowing economists to reveal relationships between different variables.
On Monday, Shiller told reporters that winning the award made him feel "incredulous."
Shiller stated: "I am drawn to economics because it deals with truly important issues. Finance attracts me because it is crucial to human activity. It follows precise mathematical relationships, but there is also imprecision because it reflects human nature."
The Nobel Prize in Economic Sciences carries a monetary award of $1.2 million, which will be shared among the laureates.