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THE MYTH OF THE RATIONAL MARKET
A History of Risk, Reward, and Delusion on Wall Street

$27.00

The first book of Time columnist Justin Fox chronicles how the efficient market theory affected the course of modern financial history—from the formative days of Wall Street to today’s global economic crisis. The theory assumed that the market was always right, and that investors made rational decisions.

In The Myth of the Rational Market, Mr. Fox tells the story of how advocates of the theory made and lost their fortune, and the part they played in the events leading to the current crisis. He also introduces a new wave of economists and scholars who no longer believe in the theory, and how their ideas could shape the future of financial markets.

The author is economics and business columnist for Time magazine. He also writes the Curious Capitalist blog on Time.com. Before joining Time in 2007, he spent more than a decade at Fortune magazine, where he covered a wide variety of topics related to economics, finance, and international business.

“Do we really need yet another book about the financial crisis? Yes, we do because this one is different. Instead of focusing on the errors and abuses of the bankers, Fox… tells the story of the professors who enabled those abuses under the banner of the financial theory known as the efficient-market hypothesis.” —Paul Krugman, The New York Times

“Justin Fox’s description of how the idea [that the market is rational and efficient] evolved and conquered is fascinating and entertainingly told. Mr. Fox has written a worthy successor to Capital Ideas, the late Peter Bernstein’s 1990s classic on the emergence of the rational-market myth: bang up-to-date; alas, without the happy ending.” —The Economist •