If asset markets are driven by the "animal spirits" of investors, then
A) those markets reflect rational behaviour.
B) those markets reflect irrational behaviour.
C) the efficient markets hypothesis is correct.
D) the stock market exhibits informational efficiency.

Question

Quizplus · Accepted Answer

The concept of "animal spirits" suggests that asset markets are driven more by emotions and psychology than rational analysis. This implies that investors may make decisions based on factors other than available information, leading to irrational behavior in asset markets.

If Asset Markets Are Driven by the "Animal Spirits" of Investors