Efficient Market Hypothesis

Biological Parallel

In mature ecosystems, every niche is occupied—nutrients are scavenged instantly, light gaps fill immediately, carcasses disappear within hours. This 'competitive equilibrium' means no free energy remains unexploited. Fama's efficient market hypothesis proposes financial markets reach similar states: all public information gets priced instantly because thousands of analysts compete to exploit any edge. Just as vacant niches don't persist in competitive ecosystems, mispricings don't persist in efficient markets—arbitrage is the ecological equivalent of niche filling.