Adaptive Markets: Financial Market Dynamics and Human Behavior
Andrew Lo of MIT Sloan builds a case that markets are neither purely rational nor purely irrational but adaptive, blending modern financial theory with psychology, neuroscience, and evolutionary biology. The course opens with the efficient markets hypothesis and the random walk, then works through behavioral biases, the neuroscience of decision-making, and evolutionary origins of financial behavior before assembling the Adaptive Markets Hypothesis itself. Later units apply the framework to hedge funds (described as the Galapagos Islands of finance), the 2008 financial crisis, and questions of ethics in finance, closing with a look at where the field is headed. Delivered through MIT's Open Learning Library, the course includes readings, interactive exercises with immediate feedback, and self-paced modules that can be used without enrolling. All materials are free; enrolling only adds progress tracking. No certificate is mentioned.