Abstract
Discussions about market efficiency in finance are unfocused when they fail to distinguish between the price-equals-value market hypothesis and the hard-to-beat market hypothesis. And discussions are further lacking when they fail to explain why so many investors believe that markets are easy to beat when, in truth, they are hard to beat. The author explains how behavioral finance contributes positively to these discussions by making the distinction between the price-equals-value market hypothesis and the hard-to-beat market hypothesis and by explaining why so many investors believe that markets are easy to beat when that is actually hard to do. Behavioral finance concludes that markets are not price-equals-value markets but they are rather hard-to-beat for investors lacking exclusively or narrowly-available information. And behavioral finance elucidates the cognitive and emotional errors that mislead investors with nothing but widely-available information into the belief that markets are easy to beat.
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