IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v248y2025ics0165176525000461.html
   My bibliography  Save this article

The efficient market hypothesis when time travel is possible

Author

Listed:
  • Gans, Joshua S.

Abstract

This paper extends the Efficient Markets Hypothesis (EMH) into a novel setting in which traders can travel back in time to exploit future information. We consider a fully specified trading model with risk-neutral, rational investors and a single, infinitely-lived asset. Agents can, at a fixed cost, build time machines, travel to the past, and trade using knowledge of future dividends and prices. Under a self-consistent, single-timeline theory of time travel, we show that no arbitrage opportunities can persist. In equilibrium, the asset price fully reflects not only all current and past information but also all future information that could have been acted upon by backward-travelling arbitrageurs. We state and prove an Extended Efficient Markets Hypothesis (EEMH), showing that time travel does not undermine but rather reinforces the no-arbitrage conditions at the heart of the EMH. We conclude by discussing the relevance of known constraints on the EMH, alternative theories of time travel and the challenges of empirically identifying time-travelling traders. Journal of Economic Literature Codes: G14, Z10.

Suggested Citation

  • Gans, Joshua S., 2025. "The efficient market hypothesis when time travel is possible," Economics Letters, Elsevier, vol. 248(C).
    • Handle: RePEc:eee:ecolet:v:248:y:2025:i:c:s0165176525000461
    DOI: 10.1016/j.econlet.2025.112209
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176525000461
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2025.112209?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Time travel; Efficient market hypothesis; Single timeline; No-arbitrage condition; Preemption;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • Z10 - Other Special Topics - - Cultural Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:248:y:2025:i:c:s0165176525000461. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.