Andrei Shleifer

Shleifer's research shows how psychological biases and limits to arbitrage prevent markets from being perfectly efficient, even when rational investors are present. His work demonstrates that noise traders, overconfidence, and herding behavior can create persistent mispricing that rational investors cannot fully correct.

Shleifer and his co-authors found that countries with stronger legal protection of outside investors tend to have more developed financial markets and better corporate governance. Their research linked legal traditions (common law versus civil law) to financial market development, showing that legal origins have persistent effects on economic outcomes.

Shleifer is a professor of economics at Harvard University, where he has taught since 1991. He is also a research associate at the National Bureau of Economic Research and has served as editor of the Quarterly Journal of Economics.

The "law and finance" literature, pioneered by Shleifer and his collaborators, examines how different legal systems affect investor protection, corporate governance, and financial development. This research shows that countries with common law traditions typically offer stronger investor protections than civil law countries, contributing to deeper and more efficient financial markets.