Lecture 1 - Why Finance?

author: John Geanakoplos, Yale University
recorded by: Yale University
published: March 17, 2012,   recorded: October 2009,   views: 13675
released under terms of: Creative Commons Attribution No Derivatives (CC-BY-ND)
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Description

This lecture gives a brief history of the young field of financial theory, which began in business schools quite separate from economics, and of my growing interest in the field and in Wall Street. A cornerstone of standard financial theory is the efficient markets hypothesis, but that has been discredited by the financial crisis of 2007-09. This lecture describes the kinds of questions standard financial theory nevertheless answers well. It also introduces the leverage cycle as a critique of standard financial theory and as an explanation of the crisis. The lecture ends with a class experiment illustrating a situation in which the efficient markets hypothesis works surprisingly well.

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Comment1 Timothy Gaye, November 19, 2017 at 12:15 p.m.:

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