Промышленный лизинг Промышленный лизинг  Методички 

1 2 3 4 5 6 7 8 9 10 11 12 13 [ 14 ] 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105

appropriate time frame for the ceremony. With its large crowds, the hajj has a history of deadly stampedes.

Rock music fans can be almost religious in their fervor, and many concerts have turned deadly. In 1979,11 fans were killed at the Who concert in Cincinnati. The causes of stampedes are often very minor; things turn deadly only when many individuals compound the original problem.

A survivor of a stampede at a Pearl Jam concert that killed eight said, Things were really great, and we wanted to move up. As people moved closer to the stage, everything was fine until, The pressure from behind was too great and the desire to have a better view led to death. Similarly a post-concert stampede in Belarus that killed 53 was caused by a hailstorm that made people rush to enter a metro station. In the dash for cover, a few young women in high heels fell and thus began a deadly chain reaction.

In the case of stampedes, groups of individuals, each one of whom may even be acting rationally, end up with very bad outcomes. The overall system works to magnify problems.

In contrast, there are other situations in which the right guidance can turn a mob of unruly individuals into an efficient team. I think of one such example whenever I board an airplane. My standard experience is that the boarding process is extremely inefficient. As soon as allowed, everyone surges forward, rushing to stuff their bags into overhead compartments. Invariably, as I work my way to my seat, I have to wait for the aisle to clear.

In contrast to this inefficient, clogged mess, I had one boarding experience that was almost magical. I was flying from Frankfurt, Germany, back to the United States on a flight that was extremely crowded. Rather than let us mob the plane, one of the gate agents organized an efficient boarding.

With just a few moments of effort, this agent organized us so perfectly that passengers in row 56 were at the front of the boarding line, followed by those in row 55, and so forth. With this setup, there were no clogs in the aisles and hundreds of people boarded the plane effortlessly in just a few minutes. It was a miracle, and one that I wish for on every flight.



On the way to his Nobel Prize, Professor Vernon Smith demonstrated that this phenomenon extends beyond boarding planes. There are situations in which the outcome is efficient beyond any reasonable expectation. Professor Smiths work concerned the magical ability of supply and demand to meet.

The question that Professor Smith addresses relates to the following joke: How many economists does it take to screw in a lightbulb? None; the invisible hand will do it.

Similarly, how is it that I can walk into the small convenience store in my condominium building five minutes before it closes and know that I will find Ben & Jerrys chocolate fudge brownie ice cream? The answer is that, as Adam Smith wrote, the self-interest of the store owner, working within a framework of law, almost magically provides the goods that I desire (or in this case, the ice cream that my wife Barbara desires).

Professor Smith found that supply and demand work even better than expected. Economists have proven that supply and demand work well when people are rational and have excellent information about the world. Professor Smiths work showed that even when people know nothing about their world (and are irrational), supply and demand do work their invisible magic. Collective efficiency sometimes arises from individual ignorance and irrationality.1

Even with the evidence that individuals are crazy, it is possible that collections of individuals, operating in markets, will make rational financial decisions. The question remains: Are financial markets more similar to stampedes where small problems multiply, or to miraculous plane loadings where crazy people are guided to efficient outcomes?

The Efficient Markets Hypothesis

The standard view in finance is that markets remove individual irrationality. This efficient markets hypothesis says that just as self-interest allows me to find my wifes ice cream in the local store, prices are pushed to the right level by an efficient and invisible hand.



I recently employed a variant of the efficient markets hypothesis in a mundane setting. The trustees of my condominium complex renovated a little exercise room and during the process removed the chin-up bar: the one piece of equipment that I used regularly. To lobby for a new chin-up bar, I attended a trustees meeting. During the meeting, I was surprised to find that the trustees were considering spending almost half a million dollars (some of it mine) to buy an apartment for our superintendent.

Among the justifications for this purchase was an analysis that said buying the apartment was a cant lose proposition. Since our building is near both Harvard and MIT, demand for housing was sure to be strong and the apartments price would definitely increase, or so the argument went.

Even though I wanted to discuss biceps, I found the lure of the cant lose investment compelling. Accordingly I asked, If the price of the apartment is so low that it will definitely rise, why is the owner willing to sell?

The trustees found great wisdom in this question and invited me to attend future meetings. There is indeed wisdom in my question, but the credit goes to a Frenchman named Louis Bachelier, not to me.2 While he was a graduate student about 100 years ago, Bachelier asked a variant of this question about financial markets.

When two people trade with each other, Bachelier suggested that a good deal for one means a bad deal for the second. Thus, when two people each seek profit, all trade between them should take place at the right prices.

Price changes must occur, Bachelier reasoned, because of new information. In other words, only unexpected news should change the prices of stocks, houses, bonds, and other assets. Since price changes only come from unexpected new information, Bachelier deduced the heretical claim that it is impossible to predict price changes. Similarly, efficiency in the housing market would suggest that cant lose propositions are not available.

Interestingly, Bacheliers idea, which is now the conventional wisdom, was extremely unorthodox in his time. Even his advisors criticized his



1 2 3 4 5 6 7 8 9 10 11 12 13 [ 14 ] 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105