The first part of this paper derives the Market Pricing Maxim (MPM): market transaction prices fully reflect available information. This is not the same as the efficient market hypothesis (EMH). The MPM holds whether prices are unbiased estimates of fundamental value, as the EMH hypothesizes, or...

Joseph Stiglitz shared the Nobel Prize in 2001 partly on the basis of an important paper of his (with Greenwald): "Externalities in Economies with Imperfect Information and Incomplete Markets." In that paper he says: "There exist government interventions (e.g., taxes and subsidies) that can make...