The following is a report by U of Chicago:
Fama’s work demonstrated that new information is very quickly
incorporated into the market, making it difficult to predict short-term
changes in asset prices. Hansen developed a statistical method for
testing rational theories of asset pricing like those advanced by Fama
They are among the 89 scholars associated with the University to receive Nobels, and among the 28 who have received the Nobel Memorial Prize in Economics.
Hansen’s “powerful, pioneering” methods for assessing economic models
have been adopted by social scientists in many fields, said List, the
Homer J. Livingston Professor and chair of Economics. “Whether it is to
explore how public policies effect unemployment rates, how networks
form, or how environmental regulations influence productivity growth,
Lars’ work plays a key role.”
Fama’s early work on efficient markets, which gave rise to the index
funds many investors participate in today, not only revolutionized
academic finance, but also made “a phenomenal impact on the practical
world, and really on people’s lives,” said John Heaton, the Joseph L.
Gidwitz Professor of Finance and Deputy Dean for Faculty at Chicago
Fama coined the term “efficient market” and the term gained widespread
use following publication of “Efficient Capital Markets: A Review of
Theory and Empirical Work” in the Journal of Finance in 1970.
The efficient markets hypothesis holds that, as a result of competition,
equilibrium prices in financial markets incorporate all relevant
Hansen’s research looks at ways to bridge the gap between economic
models and economic and financial data. His work has led to improved
methods for formulating, analyzing and testing dynamic economic models
in environments with uncertainty. He has applied these methods to study
the determinants of consumption, savings and security market prices.