Securities Regulation
On the Impossibility of Informationally Efficient Markets
Sanford J. Grossman and Joseph E. Stiglitz
- Year
- 1980
- Venue
- American Economic Review
- Level
- Introductory
Summary
Shows why perfectly informationally efficient markets are inconsistent with costly information acquisition. The article argues that prices must remain sufficiently noisy or incomplete to compensate informed traders, making it central to legal debates over disclosure, informed trading, market efficiency, and the economics of price discovery.
Citation
Sanford J. Grossman and Joseph E. Stiglitz. "On the Impossibility of Informationally Efficient Markets." American Economic Review, 1980.
BibTeX
@article{Grossman1980On,
title = {On the Impossibility of Informationally Efficient Markets},
author = {Sanford J. Grossman and Joseph E. Stiglitz},
year = {1980},
journal = {American Economic Review},
url = {https://econpapers.repec.org/RePEc:aea:aecrev:v:70:y:1980:i:3:p:393-408}
}