Asness: Grossman-Stiglitz paradox proves markets cannot be perfectly efficient
Cliff Asness · Cliff Asness - Simple Investing is Hard (EP.385) · May 13, 2024 · at 13:43
Cliff Asness, founder and CIO of AQR Capital Management, discusses market efficiency theory and why perfect arbitrage does not occur in practice.
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“Grossman and Stiglitz wrote a paper introducing a paradox about a perfectly efficient market a long time ago that people need to spend a lot of money making something perfectly efficient on research, on time, and why are they going to do that if it's perfectly efficient? They're not going to make it perfectly efficient. They're going to spend an optimal amount of money to get it close.”
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