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Beautiful Game TheoryHow Soccer Can Help Economics$
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Ignacio Palacios-Huerta

Print publication date: 2014

Print ISBN-13: 9780691144023

Published to Princeton Scholarship Online: October 2017

DOI: 10.23943/princeton/9780691144023.001.0001

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Scoring at Halftime

Scoring at Halftime

(p.89) 6 Scoring at Halftime
Beautiful Game Theory

Ignacio Palacios-Huerta

Princeton University Press

This chapter is concerned with the idea of scoring at halftime but with a more scientific perspective. It suggests that what happens at halftime in some soccer games scores big in terms of allowing us to test an influential theory in economics: the efficient-markets hypothesis. The theory posits that the stock market processes information so completely and quickly that any relevant news would be incorporated fully into the stock's price before anyone had the chance to act on it. Simply put, unless one knew information that others did not know, no stock should be a better buy than any other. If the theory is correct—that is, if observed changes in stock prices are unpredictable—there is not much we can do to gain an advantage over other traders, except perhaps to try to identify the news that causes stock prices to rise and fall and to understand the size of any likely price jump.

Keywords:   soccer games, economics, scoring, halftime, efficient-markets hypothesis, stock market, stock prices

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