Prof. Joseph Stiglitz has launched an attack on the economics that got us into this crisis, but has a plan to get us out.
Stiglitz’s plan is to ignore what we once thought was rational, things like efficient markets hypothesis, and instead pay attention to the realities of the market, the psychology of investors and information asymmetries in the market place.
The end of catch all theories may be in order, as this financial crisis has shown their limits and ability to endanger the system as a whole.
It is important to note that Stiglitz is not offering a competitor for the rational markets approach, rather that markets are not efficient and sound policy and investing must be based on that knowledge.
The following lecture was recently delievered at George Soros’ Institute for New Economic Thinking
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