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Efficient Markets, Value Neutrality and Symmetric Maximum Entropy Principle

Author

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  • Luo, Yinghao

Abstract

We study the relationship between efficient markets, value neutrality and symmetric maximum entropy principle. We find that the efficient market is in the state of maximum information entropy, which means that market prices fluctuate randomly, that value neutrality is in the state of maximum value entropy, and that information symmetry can lead markets to reach efficient outcomes, while the symmetry of resource allocation is bound to lead to value neutrality, both of which mean they are in a symmetric maximum entropy state.

Suggested Citation

  • Luo, Yinghao, 2024. "Efficient Markets, Value Neutrality and Symmetric Maximum Entropy Principle," MPRA Paper 121052, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:121052
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    File URL: https://mpra.ub.uni-muenchen.de/121052/1/MPRA_paper_121052.pdf
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    More about this item

    Keywords

    efficient markets; value neutrality; maximum entropy，information symmetry，symmetry of resource allocation;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D3 - Microeconomics - - Distribution
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • F3 - International Economics - - International Finance
    • G1 - Financial Economics - - General Financial Markets

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