The other day I watched the PBS documentary Mind Over MoneyÂ (which is available streaming for Netflix subscribers). It’s a very good compare-and-contrast discussion of two primary sides of the academic view of markets – the efficient market side and the behavioral side. It was released in 2010, so the financial crisis was included in the film’s coverage,Â along with a look at historical market bubbles.Â Â Numerous interview clips of some of the most prominent proponents of each sideÂ are included (Eugene Fama and Robert Shiller being two of the highest profile).
Overall,Â the documentaryÂ leans toward favoring the behavioral argument.Â The filmÂ provides a lot of evidence that we humans do not act rationally, especially where money is concerned. One of the more interesting experiments shown was how bubbles are created in the lab withÂ experiment participants trading a depreciating asset.Â The video,Â though,Â does a good job of including contrary arguments as well.
Definitely worth viewing.
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