three academic researchers who studied the determination of stock prices.
Eugene Fama (Chicago) developed the theory of efficient markets. According to the theory, share prices are set on the basis of all available information that is rationally included by market participants. What this means is that, in the short run, prices are unpredictable, there are no unexplored market opportunities and it is not possible to regularly produce returns higher returns than the market. Hence index funds.
Lars Peter Hansen (Chicago) developed econometric techniques, originally used to test theories of market pricing but nowadays used in many different areas of economics.
Robert Shiller (Yale) showed that, over longer periods, there are predictable movements in share prices. He wrote a book "Irrational Exuberance" during the internet share price boom, arguing that shares are overpriced. And he was right.
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