Economics Nobel Prize

Three American financial economists received this year's Nobel Prize in economics: Eugene Fama and Lars Hansen at Chicago and Robert Shiller at Yale.  MBA students will be exposed to Fama and Shiller's work in their finance classes.  Fama is considered "the father of modern finance" for developing the concept of efficient markets, where all new information about a stock is instantly absorbed into its price.  Shiller's work showed that financial markets were more volatile than one would expect from market fundamentals such as dividends.  He is especially well known for calling the stock market bubble in 2000 and the housing marker bubble in 2006.  Few, if any, MBAs will run across Hansen's main contribution -- the Generalized Method of Moments -- but their finance professors will have had to master this technique.  For more information, see this appreciation by my finance colleague Richard Warr.