The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street

The Myth of the Rational Market traces the history of the efficient markets theory, one of the most influential ideas in investing. Former Time magazine economics columnist Justin Fox examines how this theory rose to prominence and eventually fell from favor, particularly in light of the global financial crisis and Great Recession. The book spans from the earliest days of Wall Street to recent economic events, challenging the long-held belief that stock markets are always rational and correct. Fox explores the theory's origins and decline while introducing behavioral economics as an alternative framework for understanding market behavior. The narrative covers key figures in financial history and explains how the finance industry's foundational ideas were constructed and maintained despite their fundamental weaknesses.