J. (1999). Applying Memetics to Financial Markets: Do Markets Evolve towards
Journal of Memetics - Evolutionary Models of Information Transmission,3.
In the Finance literature, the concept of evolution has been applied loosely to justify assumptions of market efficiency. However, evolution has been invoked without applying any well-defined assumptions or rigorous analysis to determine if evolution would in fact lead to the stated results. This paper attempts to undertake that analysis and to bridge the gap between the fields of Finance and Memetics. This paper finds that most Finance literature inaccurately assumes that economic fitness would be the key variable in determining which memes prevail in the evolutionary process, when in actuality other dimensions of fitness are likely to prevail. Therefore, applying memetics to financial markets does not indicate that markets would evolve towards efficiency. In fact, evolution may actually lead to less efficient financial strategies prevailing.
Keywords: Memetics, Financial Market Efficiency, Market Evolution, Natural Selection
In the field of Finance, much of the literature depends explicitly or implicitly on the concept of market efficiency. There has been extensive research on the subject of whether or not financial markets are in fact efficient, however, there has been very little thoughtful discussion as to the mechanism of this alleged market efficiency.
The theory of efficient economic markets in general and financial markets in particular actually predates the arguments for natural selection as an efficiency-generating mechanism. Market efficiency had been assumed at times as a simplifying generalization but more often it had been assumed to be an inevitable outcome based on a series of theoretical assumptions. These assumptions have included maximizing behavior both on the part of consumers (maximizing utility) and firms (maximizing profits), with actors having perfect information and no transaction costs, and other properties including non-satiation and transitivity of preferences. Working from these assumptions, economists have shown that markets will reach a state of efficiency (for example in  and ).
However, over time it has become increasingly evident that most if not all of the underlying assumptions of market efficiency are suspect. Actors do not have perfect information, there are transaction costs, and economic agents often do not act rationally even with the information they have (for example, managers often appear to "satisfice", or search for alternatives only when performance falls below an aspiration level and only continue searching until a satisfactory option is found rather than finding best alternative [18, 24]). In addition, although maximizing of the expected value of outcomes is possible in a stochastic environment, when outcomes are uncertain, no expected value of returns can be formed, and therefore maximizing behavior is not technically possible. New evidence has been recently surfacing that stock market returns are chaotic  and therefore uncertain.
The argument for evolution in financial markets has come about partially to address criticisms of the underlying assumptions of market efficiency. If the original axioms behind efficient markets are not consistent with reality, then some other mechanism must exist if market efficiency is assumed to hold. Therefore, in the absence of any alternative mechanism, the theory of financial market efficiency relies on an evolutionary mechanism that is often-cited but usually stated only vaguely. Financial theorists assume that natural selection will favor strategies that are more rational and effective in investments, capital budgeting, and other financial decisions. This eventually leads to an efficient market, according to these theorists, since only the most effective strategies can survive in the marketplace.
Friedman  argued that irrational agents will disappear from the marketplace since they should systematically receive lower than average returns and higher than average losses. Miller  used the concept of evolution to reconcile the difference between financial theory and the actual decision procedures used by financial professionals within a corporation. According to Miller, "evolutionary mechanisms are at work to give survival value to those heuristics that are compatible with rational market equilibrium, however far from rational they may appear to be when examined up close and in isolation." Miller argues that it is not necessary that these efficient investors use highly sophisticated statistical and mathematical techniques to arrive at the efficient investment strategy. Evolution insures that only the heuristics with survival value will continue to exist. Zingales  might have stated the general position of modern financial theory best on this matter when he states "most economic theories are either implicitly or explicitly based on an evolutionary argument".
Keynes  offered an alternative theory for the behavior of financial markets. Keynes argued that with the development of financial markets, owners have become increasingly removed from the enterprises they hold a stake in. Therefore, "the element of real knowledge in the valuation of investment by those who own them or contemplate purchasing them has seriously declined." Keynes believes that in the absence of real knowledge, investors value financial assets based on a convention. That is, a belief that the existing state of affairs will continue indefinitely except to the extent that investors have specific reasons to believe otherwise. But this conventional valuation can become quite volatile since it has little foundation. As a consequence, "a conventional valuation which is established as the outcome of the mass psychology of a large number of ignorant individuals is liable to change violently as the result of a sudden fluctuation of opinion due to factors which do not really make much difference to the prospective yield; since there will be no strong roots of conviction to hold it steady." Keynes further argues that even experts in the market would do better by trying to understand these psychologically-based fluctuation than they would do by trying to understand the future real income streams of the underlying asset. Therefore financial markets become a place "where we devote our intelligences to anticipating what average opinion expect the average opinion to be."
This Keynesian psychologically-based model of financial markets probably explains most of the variance in market prices much better than prevailing efficient-market hypotheses. In fact, there is empirical support for the idea that market movements are not justifiable based on changes in the stream of subsequent dividends . However, little attention has been given to the Keynesian viewpoint regarding financial market behavior. Probably, Friedman, Miller, or other traditional financial theorists would counter that even if this "convention" led in the short-term to irrational pricing, in the long-run selection pressures would again work to bring market pricing close to the value of the underlying asset. However, Keynes gives several valid arguments why the investor who looks at the long-term underlying value of assets will not dominate financial markets. First, it is easier to outguess the crowd than to guess long-term changes in real earnings. As Keynes puts it; "Investment based on genuine long-term expectation is so difficult today as to be scarcely practicable. He who attempts it must surely lead much more laborious days and run greater risks than he who tries to guess better than the crowd how the crowd will behave." In addition, time is highly discounted by investors, so there is much more desire to make large gains quickly than to invest for the long-term. Furthermore, for investments made or answerable to committees, boards, or banks, strategies that are sensible long-term but that suffer short-term losses will not be tolerated. Haugen  discusses this last point in more detail. Modern markets are dominated by institutional investors. These institutional investors are evaluated for performance over relatively short horizons. Therefore, Haugen argues, investment market inefficiencies can persist even when the market knows about them if these inefficiencies can only be exploited over a long-term horizon.
Without the assumption of a natural selection process, there appears to be no compelling reason to assume financial markets would behave in a manner approaching efficiency in light of Keynesian arguments, empirical evidence of irrational market behavior, widespread use in the marketplace of flawed financial valuation techniques (according to traditional theory) and a wealth of psychological evidence of human biases in irrationality (for just a couple examples, see  or ).
Yet despite its widespread use in finance as an implicit mechanism for the assumption of market efficiency, the term evolution has been used in financial markets very loosely and without the analysis and scientific rigor to verify needed its validity. A good example from the field of Finance of the potential for inconsistencies in a loosely defined theory can be seen in Cox, Ingersoll & Ross . The authors examine a very commonly used construct in the Financial literature, the `expectations theory' of the term structure of interest rates and find that this `theory' is actually several independent and mutually incompatible concepts. A similar problem exists with the assumptions made in Finance regarding evolution. When examined closely, evolution in financial markets is complex and leads to results incompatible with the assumptions of financial theorists. By neglecting to examine this basic issue, the field of Finance has also failed to assimilate extensive literature that already exists in the field of evolution as it to applies to human knowledge, or memetics.
Although the main arguments in this paper have not been presented before, some economists have attempted to demonstrate that natural selection will not lead to market efficiency. Hodgson  for example gives seven "Problems for Pangloss" (i.e., problems with the conclusion that evolution always leads to the best possible outcomes). The problems he lists include (among others): the traits of new entrants effect the results, not just firm survival rates; evolution can be path-dependent and frequency-dependent; and there can be multiple, shifting adaptive peaks. Others presents different arguments against natural selection leading to behavior "as if" economic agents were optimizers include Nelson & Winter  and Heiner .
This paper will start out by assuming that there is an evolutionary process taking place in financial markets, particularly investment markets, and that the stable unit of evolution is the financial idea/strategy or meme. This paper will argue that these assumptions when thought through lead to conclusions inconsistent with the assumptions of financial theorists. First, it will be shown here that the economic reproduction (dollars producing more dollars) is a relatively slow and weak transmission method that will be dominated by interpersonal communication as a method of meme transmission. Then, if we add one additional assumption, that what gets communicated and assimilated most readily will at least sometimes differ from what is most economically viable (formally, economic fitness is not perfectly correlated from interpersonal fitness), this will lead to the conclusion that evolutionary competition will not lead to market efficiency in investment markets.
The theory of evolution was originally presented in Charles Darwin's the Origin of Species . According to Darwin's theory, when there is variance in a population, the members of the population most fit to survive will have the most progeny and will therefore become more prominent in the population in future generations. Darwin called this process "natural selection". When there are new random variations continually added to a population, over many generations natural selection will lead to ongoing refinement of biological organisms and the spontaneous creation of new species. Darwin called this process "descent with modification". It was actually Herbert Spencer who popularized the term evolution for this process .
Dawkins  came up with the term meme as the smallest unit of cultural transmission, a concept parallel to that of the gene in biology. It is important to note that Dawkins' original discussion of the meme was in the context of a larger text supporting a perspective on genetic evolution that placed the gene at the center of the evolutionary stage rather than the species, group, or even the organism. Certain genes succeed, Dawkins argued, because they are successful at producing more identical genes. From this perspective, the gene can be viewed as "selfish" while the organism can be viewed as merely a vehicle for the genetic material. The same can be said of memes: the memes that succeed will be the ones best at producing more identical memes. On the surface, this appears to be a rather technical distinction between genes or memes and their host organism, but it can have important implications. For example, in biology it implies the sustainability of altruistic behavior towards kin, and it has important implications for the existence of sexual reproduction versus asexual reproduction  In financial markets, it implies that the memes that eventually dominate will be the ones most likely to reproduce themselves, which may not necessarily coincide with the memes that most successfully produce dollars. This point will be discussed in more detail in later sections.
In order for evolution to occur, we need to have
All four of these conditions are satisfied by investment strategies in financial markets, however there are actually two rationales for selecting variations that are adaptive (condition 3) and three methods for investment strategies to increase their presence in the marketplace, or replicate (condition 4). Examining the variations of conditions 3 and 4 are key to understanding how evolution will occur in financial markets since these variations leads to very different conclusions.
In financial and economic theory, the key basic unit of interest is the dollar. However, dollars cannot evolve because they lack in several conditions above, starting with the fact that they lack variation. Memes work as evolving units, but memes alone do not answer the questions that are of interest in finance. Financial theorists do not care if investing based on astrological signs becomes the favored method among randomly selected United States citizens, they only care about the prevalence of an investment strategy meme to the extent that there are dollars behind that strategy in the financial market. Therefore, we must take into account the dollars backing a certain investment strategy meme in the market since this will indicate the current prevalence of that meme in dictating market behavior.
To proceed then, we will define the evolving units, investment strategies, as falling within the larger category of memes. However, the states of nature that determine the efficiency of the market are defined in terms of dollar-weighted meme frequencies. Note that the dollar-weighted frequency of a meme is defined in terms of the dollars currently being invested using that meme. In other words, let us assume a specific investor has a million dollars of total investments, but that investor only invests a hundred thousand using a specific investment strategy. If we also assume that no other investor is using that strategy and that the total market is worth a hundred million dollars, that meme's current presence in the market place can be stated as having a frequency of 0.1%, not 1.0% which is the total investor's presence in the market place.
As mentioned earlier, the last two conditions required for evolution can now be seen to be satisfied in multiple ways. A financial theorist would define a meme's adaptive value or fitness based on its ability to reproduce more dollars for the individual holding the meme since investment strategies producing more dollars will tend to increase in dollar-weighted frequency in the marketplace. A memetic theorist would more likely focus on the meme's probability of interpersonal transmission when defining fitness, since the memes that are transferred from person to person more rapidly will tend to increase in dollar-weighted frequency in the marketplace. This suggests that investment strategy memes can increase dollar-weighted frequency either by reproducing dollars, or by transferring between people. There is actually one more leading to a total of three methods of replication:
Only interpersonal reproduction represents true reproduction in the sense that only this method alters the frequency of the basic unit, the meme, in the human population. However, all three methods of reproduction can legitimately alter the dollar-weighted meme frequency in the market.
The concept of intrapersonal reproduction is somewhat more difficult than the other two, so some additional explanation is warranted. If an investor uses a certain financial meme to invest only part of his dollars in the market, the meme's dollar-weighted frequency can be defined in two ways: either by the number of dollars using that strategy, or by the total dollars in the market by that investor. The former definition was chosen here. However, an investor can easily move funds around, increasing or decreasing the presence of a meme in the market. This does not require communication between people in any form nor does it require that any profits are made in the market, therefore it technically is a third distinct type of reproduction. Intrapersonal reproduction is probably minor in impact, but is added here for completeness.
In reaching their conclusions regarding market efficiency, financial theorists have only taken economic reproduction into consideration. As the following sections will demonstrate, adding the other reproductive methods into the mix can lead to evolutionary outcomes quite different from the expectations of financial theorists.
Although financial theorists have implicitly been assuming that economic reproduction is the dominant method of transmission of investment strategy memes, it should be noted that any reasonable model of financial markets must include interpersonal transmission. Without interpersonal transmission, the only way for a meme to reach dominance in the marketplace is for a single individual to dominate the marketplace. Of course, it is absurd to think of a single individual owning the majority of, for example, the United States stock market, and this is certainly not what Miller or other financial theorists are postulating when they discuss markets evolving towards efficiency.
It is also important to note here that a meme's interpersonal reproductive fitness may have nothing at all to do with its economic reproductive fitness. Although one could certainly argue that, for example, an investment strategy that works is more likely to be passed on interpersonally, the opposite viewpoint could also be argued as convincingly. Dawkins  described a meme's fitness in terms of its "psychological appeal". It can be argued that it is often the theories with the least scientific validity that have the greatest psychological appeal. Scientifically valid ideas are often complicated, filled with nuances and caveats, and often lead to conclusions we would prefer not to believe. On the other hand, an appealing but scientifically inaccurate alternative meme can have many psychological advantages. It can be simple enough to remember and transfer easily, it can have intuitive appeal, and it can prevent cognitive dissonance by leading to conclusions that the investor would prefer to believe. An example of a psychological factor that can become important in investment strategy meme transmission is the psychological construct called `perceived control' . The finding of relevance here is that it may sometimes be psychologically healthy for people to believe they have control over a situation, even if the belief is illusory. The theory of financial market efficiency implies a relatively low level of control over financial markets by investors. Therefore, it is quite possible for example that theories implying markets that can be outguessed and profitably exploited using past market data may have more psychological appeal than an efficient view of financial markets.
One obvious example in financial markets is technical analysis, where investors attempt to guess future prices from past trends. With the exception of a few possible anomalies, there is considerable empirical evidence indicating that investment markets follow a random walk with future performance having no correlation with past performance (see [2, 13] for evidence regarding the stock market, and  for the earliest evidence regarding commodity markets). Yet this type of analysis continues to be performed not only by private investors but often by large investment firms that spend considerable amounts of money hiring `experts' to guess what a stock's price will do tomorrow based on what the price did yesterday. Part of the reason might be the concept of perceived control mentioned earlier. There are also other psychological explanations. The idea that events known to be random can be somehow predicted from prior events is a common gambler's fallacy. There may be an inherent psychological tendency that makes humans prefer to see patterns in random events.
There are also institutional influences that will tend to encourage irrational beliefs. More specifically, it is in the interests of most industry professionals for investors to believe that simple schemes, strategies, and rules can be employed to outguess the market. Industry participants who make money by generating trades benefit when investors believe that they can outguess the market and therefore make frequent trades. Full-service investment firms and financial advisors gain when investors believe that their advice allows investors to outperform the market. Mutual funds benefit when investors believe that they will outperform the market. The investment industry has an interest in promoting certain strategies, even when evidence indicates that these strategies have no basis in reality. The end result is market volatility and inefficiency.
Also, it should be kept in mind that like its biological parallel, the market for memes can be highly competitive, with many potential contenders. If there are many possible competing financial memes and only a small percentage of those memes are economically sound, chances are that the most psychologically appealing memes are not the most economically sound memes assuming the two types of fitness exhibit some statistical independence.
The number of memes representing a given investment strategy in the population of humans (as opposed to dollars) at time t+1 can be defined as a product of its interpersonal reproductive fitness and the number of memes present at time t.
where represents the quantity of an investment strategy meme in the human population during a given time period t, and represents the interpersonal reproductive fitness of the meme during that time period.
If we assume no interpersonal reproduction and only look at economic reproduction, the dollars invested using a given meme in the marketplace can be defined as:
where represents the dollars of a given investment strategy at time t and represents the economic reproductive fitness of the dollar-meme during that time period.
Note that these equations hold by definition since economic fitness and interpersonal fitness are defined as just the ratio of the investment strategy's presence in the population (human or dollar) over the two time periods.
Combining equation 1 and equation 2, we get:
Where represents the average dollars invested per host in the marketplace using a particular investment strategy at time t. This term has been added to allow translation from the meme's presence in the human population to its presence in the financial market.
Note that can be considered to represent what has been referred to in the memetics literature as a meme's fitness (the only difference here being the time subscript indicates that the fitness is the actual value obtained in a given time period rather than a stochastic variable with an expected value and associated distribution).
Equation 3 is unusual in that it contains two very different types of transmission. In fact, these two forms represent completely different perspectives on financial meme transmission, and reproduction will generally be dominated by one or the other, not both together. However, both are shown together here since we are not assuming before hand which method of reproduction controls the process. Therefore, we must initially work with both forms of reproduction together in one equation so that we can determine which reproductive method dominates.
By adapting an equation for the fitness of a meme from Heylighen :
where F represents a meme's fitness, a represents its rate of assimilation, r represents its rate of retention, e represents its rate of expression, and n represents its rate of transmission.
(This equation assumes another slight implicit modification from Heylighen's equation. In the original discussion, the assimilation stage took place first and the transmission stage last. However, the equation above assumes the dollar-meme is already assimilated in the first individual, so expression and transmission take place first, with assimilation and retention by the new individual being the final stages.)
The above equations only include the first two methods of reproduction and do not consider the rate of intrapersonal transfer. This has been done because it simplifies the analysis without reducing the validity of the conclusions. It is possible to expand and refine equations to more precisely model reality almost without limit. However, as the next section will demonstrate, the purpose here is to illustrate the simple point that economic fitness is not the primary driver of investment strategy dollar-weighted frequencies in the marketplace. Therefore, the equations have focused only on the two primary methods of transmission. Intrapersonal transfer, in any case, can only work to reduce the importance of economic fitness in the overall equation, since the initial investment strategies of new entrants into the marketplace, the strategies adopted by investors increasing their presence in the market, and switching between investment strategies will be driven by the same factors that determine interpersonal reproductive fitness rather than economic fitness.
As equation 5 shows, there are many variables to consider in determining an investment strategy meme's total reproductive rate. Variables such as assimilation rates, retention rates, expression rates, and transmission rates each will follow their own rules for determining fitness which will have little or nothing to do with economic theory and a great deal to do with psychological theory. It should be noted that two of the interpersonal fitness terms, and will always be less than or equal to 1 while and can be much larger than 1. In fact, in this modern age of mass communication through television, books, the internet, and other mass media, the transmission rate can easily be in the millions and become the dominant variable in defining a meme's fitness.
Even in the absence of the mass media and using reasonable assumptions, it can be demonstrated that interpersonal transmission will dominate economic transmission of dollar-memes. Let us take two people each with $1,000 to invest. One uses a high return investment strategy that produces a constant rate of return of 30% while the other uses a low return strategy with a rate of return of only 5%. This would be considered a rather extreme difference in the financial world. Let us assume the low return strategy is somehow more appealing, and therefore led to 3 people with $1,000 each to invest being told and assimilating/retaining the strategy within a year, while the high return gets transmitted to two people with $1,000 to invest a year rather than three, then equation 1 shows the following reproductive rates:
High profit dollar-meme:
Low profit dollar-meme:
In this example, natural selection would eventually lead to the domination of the low profit dollar-meme, despite the fact that the economic fitness difference would be considered extreme. Although this is a somewhat arbitrary example, it is reasonable to expect that the interpersonal reproductive fitness will dominate in most real world circumstances. Economic Reproduction is a relatively slow process. The 1.30 fitness shown above can be taken as an extremely high fitness for economic reproduction that is unlikely to be matched by even very fit strategies in the real world. Even each investor telling one other investor about a strategy at some time during the year (assuming the second investor assimilates and uses this information) leads to an interpersonal reproductive rate more than triple the economic reproductive rate. It is difficult to get precise interpersonal reproductive fitnesses for investment strategy memes, but there is clearly a potential for interpersonal reproduction to take place extremely rapidly relative to economic reproduction. Every year there are new books containing investment strategy memes that are transmitted to millions of people. Every day, investment television shows, radio shows, and print media speak to millions of people, and thousands of people receive calls from investment industry professionals. It is easy to imagine an investment strategy meme starting with a single individual and reproducing at a rate that reaches tens of thousands of investors within five years. This would imply an interpersonal reproductive rate of 6.0 or more, a rate that would make the economic fitness of a meme insignificant. In fact investment strategy memes must reproduce at very high rates at time, because entire new markets of futures and other financial instruments have developed and reached a critical mass within only a few years. These markets could not have developed so rapidly unless the memes guiding individuals to invest in these markets had not also reproduced equally rapidly.
It appears that under real-world conditions, the interpersonal fitness of a meme will dominate the economic fitness in determining the total fitness. In fact, using economic fitness alone, it is unlikely that much evolution of financial markets could have occurred due to time constraints since the environment changes more quickly than the natural selection process. Take, for example, one meme (A) that yields a return of 20% on average and another meme (B) that yields a return of 10%. If we assume that meme A is a new variation that initially exists in 1% of the population, we can determine how long it will take this new economically superior strategy to dominate 99% of the population. If we define the frequency of meme A as p, and the frequency of meme B as q, then, using an equation developed by Haldane :
where the 0 subscript represents the starting population frequency and the subscript e represents the ending population frequency, and the fitness, r, is defined as:
or in this case:
This amount of time is older than most current financial markets. This is also much longer than the time it takes for the market environment to change dramatically. For example, the Capital Asset Pricing Model on which much of modern portfolio theory is based has only been in existence for about 35 years [15, 22] and the amount of time betas have been used extensively by investors as a measure of risk is much less than this. Therefore, it is unlikely that economic fitness alone would lead to an efficient natural selection process since the structure of the financial market changes more quickly than investment strategies change in frequency (i.e. using only economic fitness, by the time a successful meme becomes dominant, the environment for which it is successful no longer exists).
In addition to large scale structural changes in the market that occur over time, there are also cyclical effects to consider. For example, an investor who chooses stocks that move strongly with changes in the total market (a strategy of choosing high beta stocks) would do quite well in a period of rapid economic growth, while the opposite would be true in a recession. In general, the strategies that work best in bull markets are quite different than the strategies that work in bear markets. Besides the obvious general economic and market cycles, there are other cyclical changes in the environment that will affect investment strategy success including inflation rates, interest rates, the regulatory environment, and energy prices. Strategies that are the most successful in one environment will tend to reproduce rapidly at the expense of strategies that hold a moderate level of success but that work in all environments. These temporarily successful strategies may come to dominate the market only to meet with disaster when conditions change. The result will be inefficient and overreactive financial markets.
If we assume evolution takes place in financial markets and that the investment meme is the unit of selection, under real-world conditions, interpersonal reproduction will dominate economic reproduction as the primary reproductive method of investment strategy memes. Fitness and natural selection in financial markets will follow the theories and models developed in the field of Memetics rather than in Finance or Economics. If we further assume that economic and interpersonal fitnesses differ, the growth rate of an investment strategy meme may have little to no correlation with its economic soundness. This leads to a conclusion quite different from that previously assumed by financial theorists. Financial evolution will probably not lead to efficient markets and more likely would result in the dominance of inefficient market strategies.
Although financial markets and particularly investment markets have been used as the primary example in this article, the same assumptions regarding evolution and efficiency have often been made in general economic theory, and much of the discussion in this article would also apply to the field of Economics.
 Brehmer, B. and Joyce, C. R. B. (1988). Human Judgment: The SJT View. North Holland, Amsterdam.
 Cootner, P. H. (1964). The Random Character of Stock Market Prices. MIT Press, Cambridge, Massachusetts.
 Cox, J., Ingersoll, J., and Ross S. (1981). A Re-examination of Traditional Hypotheses about the Term-Structure of Interest Rates, Journal of Finance, 36:769-799.
 Darwin, C. R. (1859). On the Origin of Species. Murray, London.
 Dawkins, R. I. (1976). The Selfish Gene. Oxford University Press, New York.
 Friedman, M. (1953). The methodology of positive economics, Essays in Positive Economics. University of Chicago Press, Chicago.
 Gabora, L. (1996). Culture, Evolution, and Computation, 2nd On-line Workshop on Evolutionary Computation, http://www.bioele.nuee.nagoya-u.ac.jp/wec2/papers/files/gabora.txt.
 Haldane, J. B. (1957). The cost of natural selection, Journal of Genetics, 55:511-524.
 Haugen, R. A. (1995). The New Finance: The Case Against Efficient Markets. Prentice Hall, New Jersey.
 Heiner, R. A. (1983). The origin of predictable behavior, American Economic Review, 73:560-595.
 Heylighen, F. (1998). What makes a meme successful? Selection criteria for cultural evolution, 15th International Congress on Cybernetics, http://pespmc1.vub.ac.be/Papers/MemeticsNamur.html.
 Hodgson, G. (1993). Economics and Evolution. The University of Michigan Press, Ann Arbor, MI.
 Kendall, M. G. (1953). The analysis of economic time-series, Part I. Prices, Journal of the Royal Statistical Society, 96:11-25.
 Keynes, J. (1936). The General Theory of Employment, Interest and Money. Harcourt, Brace and Company, New York.
 Lintner, J. (1965). The valuation of risk assets and the selection of risky investments in stock portfolios and capital budgets, Review of Economics and Statistics, 47:13-37.
 Miller, M. (1977). Debt and Taxes, Journal of Finance, 32:261-275.
 Nelson, R. & Winter, S. (1982). An Evolutionary Theory of Economic Change. Harvard University Press, Cambridge, MA.
 Newell, A. & Simon, H. (1972). Human Problem Solving. Prentice-Hall, New Jersey.
 Peters, E. E. (1994). Fractal Market Analysis: Applying Chaos Theory to Investment and Economics. John Wiley & Sons, New York.
 Rotter, J. B. (1966). Generalized expectancies for internal versus external control of reinforcement, Psychologica1 Monographs, 80(1):1-28.
 Samuelson, P. A. (1971). Foundations of Economic Analysis. Atheneum, New York.
 Sharpe, W. F. (1964). Capital Asset Prices: A theory of market equilibrium under conditions of risk, Journal of Finance, 19:425-442.
 Shiller, R.J. (1981). Do stock prices move too much to be justified by subsequent changes in dividends? American Economic Review, 71:421-436.
 Simon, H. A. (1959). Theories of decision-making in economics and behavioral science, American Economic Review, 49:253-284.
 Trivers, R. (1985). Social Evolution. The Benjamin/Cummings Publishing Company, Menlo Park.
 Weintraub, E. R. (1979). Microfoundations: The Compatibility of Microeconomics and Macroeconomics. Cambridge University Press, Cambridge.
 Working, H. (1934) A Random Difference Series for Use in the Analysis of Time Series, Journal of the American Statistical Association, 29:11-24.
 Zingales, L. (1998). Survival of the Fittest or the Fattest? Exit and Financing in the Trucking Industry, Journal of Finance, 53:905-938.
Back to Issue 2 Volume 3