chapter  9
Beyond performativity, how and why American courts should not have used efficient market hypothesis
ByFranck Jovanovic
Pages 8

This chapter provides a critical perspective on the performativity of the Efficient Market Hypothesis (EMH) by studying its use by practitioners, particularly courts and judges in the United States; and analyses the dialogue of deaf this use has created. EMH was formulated in the period from 1959 to 1976 to give a theoretical explanation to the random character of stock market prices. The chapter argues that EMH leads to the creation of a fiction, and by trying to shape the real financial markets from this fiction, practitioners and academics have generated a gap between the observation of real financial markets and the reality they observe from this fiction. Efficient market is a very well-known term in finance, widely used by academics and practitioners. EMH constitutes one of the major theoretical foundations of the financial economics' framework. The chapter shows that EMH is a fiction that created a hyper-reality rather than performed financial markets.