The efficient markets criticism works if you have non-public information that clearly points to a greater or lesser risk than what market participants think, but it doesn't work for non-public information that is different from market sentiments by only a degree. If you have private information that the Russian government has a 2% chance of using a nuclear weapon on Crimea (perhaps you know they will roll a 50-sided die and use them on a 1), but you can't tell whether the current market prices imply a 0% to 4% probability, you have no way of using your private information without performing a full analysis of the asset. If there were a prediction market it would be straightforward to do so, however. The same is true of private superior analyses, because they will generally differ in terms of probability by a relatively small amount.
It's really just a question of efficiency. A market for a single asset will be less efficient than the market for that asset and 10 related questions because the information costs are lower for people who have private information that bears on those questions.
but it doesn't work for non-public information that is different from market sentiments by only a degree. If you have private information that the Russian government has a 2% chance of using a nuclear weapon on Crimea (perhaps you know they will roll a 50-sided die and use them on a 1), but you can't tell whether the current market prices imply a 0% to 4% probability, you have no way of using your private information without performing a full analysis of the asset.
I disagree for several reasons:
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