Value and probability

Mark Hayes

Journal of Post Keynesian Economics, 2006, vol. 28, issue 3, 527-538

Abstract: This paper expresses the Post Keynesian critique of "fundamental value" and the efficient markets hypothesis using the symbols of Keynes's Treatise on Probability. A distinction is drawn between ex ante and ex post fundamental value, which coincide in the case of fixed annuities but not for financial assets in general, except in an ergodic system. Keynes's symbols allow expression of the general form of the probability relation represented by ex ante fundamental value, highlighting its dependence on unreliable propositions about future events, and also of the conventional basis of valuation, which it is only rational to adopt in such circumstances.

Date: 2006
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DOI: 10.2753/PKE0160-3477280308

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