Trio awarded Nobel economics prize

Yale University Professor Robert Shiller: ''I'm still in disbelief''

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The 2013 Nobel Prize in economics has been awarded to Eugene Fama, Lars Peter Hansen and Robert Shiller.

It was awarded for their "empirical analysis of asset prices", according to the awarding committee.

The committee said the trio's separate pieces of work had "laid the foundation for the current understanding of asset prices".

The prize is worth 8m Swedish krona (£775,000; $1.2m), which will be shared equally among the three winners.

Eugene Fama from the University of Chicago was praised for demonstrating that share prices are extremely difficult to predict in the short run, with new information quickly incorporated into prices.

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All three of these economists are within the field of what's called behavioural finance”

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The committee said Mr Fama's findings had had "a profound impact" on subsequent research, and also changed market practice.

Lars Peter Hansen, also from the University of Chicago, was awarded the prize for his development of a statistical method that was able to test theories on asset pricing.

Robert Shiller, from Yale University, was included for his 1980s discovery that stock prices fluctuate much more than corporate dividends.

He told BBC Radio 4's World at One that the award was a complete surprise

"I had friends telling me I'd get it, but I didn't believe them," he said.

Prof Shiller is known for his works on financial bubbles, as outlined in his book Irrational Exuberance. He said there was "a kind of social epidemic" which meant bubbles were likely to recur.

"There are bubbly markets in the world, in the stock market or in the property market. Many countries seem to have been going through property bubbles in the past year," he told the BBC.

The Nobel committees have now announced all six of their annual awards for 2013.

The economics award was added to the existing Nobel award in 1968 by Sweden's central bank as a memorial to Swedish industrialist Alfred Nobel.

Mr Nobel created the other five prizes for medicine, chemistry, physics, literature and peace in 1895.

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