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By Staff Reporters
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The Grossman-Stiglitz Paradox was introduced by Sanford J. Grossman and Joseph Stiglitz in a joint publication in American Economic Review in 1980 that argues perfectly informationally efficient markets are an impossibility since, if prices perfectly reflected available information, there is no profit to gathering information, in which case there would be little reason to trade and markets would eventually collapse.
IOW: According to colleague Eugene Schmuckler PhD MBA CTS, the Grossman-Stiglitz paradox is the inability to recoup the cost of obtaining market information and thus implies that efficient markets cannot exist.
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Filed under: "Ask-an-Advisor", Financial Planning, Funding Basics, Glossary Terms, iMBA, Inc., Investing, mental health | Tagged: Eugene, grossman, Grossman-Stiglitz paradox, information, information paradox, paradox, Sanford J. Grossman, schmuckler, Stiglitz |
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