3 American winners

AMERICANS Eugene Fama, Lars Peter Hansen and Robert Shiller won the 2013 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (commonly known as the Nobel Prize for Economics) on Monday "for their empirical analysis of asset prices".

The Royal Swedish Academy of Sciences, which awards the eight million crown (S$1.5 million) prize, said their research has improved the forecasting of asset prices in the long term and helped the emergence of index funds in stock markets.

The award citation said Eugene Fama and several collaborators demonstrated that stock prices are extremely difficult to predict in the short run, and that new information is very quickly incorporated into prices; Robert Shiller found that stock prices fluctuate much more than corporate dividends, and that the ratio of prices to dividends tends to fall when it is high, and to increase when it is low; and Lars Peter Hansen developed a statistical method, the Generalised Method of Moments, that is particularly well suited to testing rational theories of asset pricing.