Information and Theories of Efficiency in Financial Markets

The purpose of this thesis is to analyse the state of the art of financial markets, focusing on information and on the theories of efficiency. I will present the Efficient Markets Hypothesis developed by Eugene Fama, the cornerstone of every classic model, which states that it’s not possible to “beat the market” through assets trading since all available information is reflected into prices. I will then present the Adaptive Markets Hypothesis, a theory developed by Andrew Lo that tries to complete the theory of Fama and to reconcile it with Behavioral Finance. The Adaptive Hypothesis applies the principle of evolution of the species to financial markets: individuals adapt according to market forces and compete with each other in order to survive in the financial environment. Finally, i will analyze the actual situation of financial markets for what concerns information and knowledge. I describe the technological changes that have affected financial markets over the recent years and the role of media in spreading information, creating an environment in which the real challenge for investors is to find the appropriate news and to avoid disinformation and fake news.