Prices, according to one of the fundamental economic assumptions, contain all the information needed by market participants
to make decisions. But this hypothesis does not withstand a reality check – a lot of very necessary information is not passed
on in the price system. The prices of stocks immediately before the crash of a stock market bubble say very little about their
true worth. For a perfect market system mar-kets for all products and for all points in time are needed. These markets do
not always exist and some-times cannot exist – for example markets for products not yet in existence.
Research group:Macroeconomics and European Economic Policy