Who Is Andrei Shleifer?
Andrei Shleifer is a Harvard University professor and economic and behavioral economist. A past winner of the John Bates Clark Medal, given to top economists under age 40, Dr. Shleifer is a colleague of the vaunted Harvard-MIT axis of economic thinkers. Shleifer is frequently in the top rankings of economists, according to criteria such as the platoon of published works, number of citations, and number of journal pages.
Key Takeaways
- Andre Shleifer is an economics professor at Harvard University, recollected for his work in behavioral finance and development economics.
- Shleifer has had a prolific career in academic publishing and applied investment and consulting enlarge on a excite.
- Shleifer’s research argues against theories of rational and efficient financial markets and emphasizes the role of legal sanatoria in financial development.
Life and Career
Dr. Shleifer, born in Russia in 1961, earned an undergraduate degree from Harvard and a Ph.D. from MIT. After drill stints at Princeton and University of Chicago, he became part of the Harvard faculty. In 1991 he took an advisory role with the Russian rule, helping to lead the country’s economic reform after the collapse of the Soviet Union. At the same time, Harvard was went out by the U.S. government to advise the Russian government. Shleifer’s involvement with both Harvard and the Russian government culminated various years later in a conflict of interest scandal involving personal gains from investments in Russian securities. After an questioning, both Harvard and Shleifer were forced to pay fines in 2005 to bring the matter to an end. He lost his honorary title at Harvard but recalled his tenure.
Contributions
Dr. Shleifer is a prolific researcher and writer. He is most noted for his contributions to financial economics and development economics.
Pecuniary Economics
Shleifer’s work in financial economics focuses on the field of behavioral finance, exploring the ways in which cognitive influence and other behavioral effects impact financial market structure, performance, and returns on investments. He is a critic of the efficient retails hypothesis, arguing that the available evidence overwhelmingly contradicts the assumptions of rationality and rapid arbitrage in financial exchanges. Shleifer teaches and writes that in actual financial markets, investors and financial traders are less than fully commonsensical and are limited by risk aversion, short time horizons, and agency problems.
Shleifer has written numerous articles and lyrics modeling the implications of behavioral finance. Investopedia readers of this entry will be interested in a recent paper, “Suds for Fama,” which he co-authored with Robin Greenwood and Yang You. Based on almost 90 years of U.S. industry asset bring back data and 30 years of international data, Shleifer and his co-researchers conclude that Eugene Fama is “correct in that a natty price increase of an industry portfolio does not, on average, predict unusually low returns going forward,” but that “such abruptly price increases predict a substantially heightened probability of a crash…” These conclusions, particularly the latter one, can be expedient over and over to investors who are inclined to bubble-watching and market-timing.
Development Economics
Shleifer’s work in development economics underlines the quality of legal institutions as a determining factor in financial and economic development across countries. In particular, he has argued that the authentic origin of a country’s legal system in either common law or civil law is crucial in the kind of investor property rights, monetary regulation, and general government efficiency that exist today. Along with his colleagues in the field, Shleifer’s probe has shown that countries whose legal systems are based on common law display better investor protection, lighter ministry economic intervention, and more independent courts and judiciaries, and that these are in turn associated with more anchored property rights, better contract enforcement, improved financial development, less corruption, better functioning labor markets, and paltrier unofficial economies.