Defoe's Hypothesis

Defoe's Hypothesis suggests that markets tend to be more stable and efficient when information flows freely among participants. It posits that transparency, open communication, and the availability of accurate data reduce uncertainty, allowing investors and traders to make better-informed decisions. This environment discourages manipulation and irrational behavior, leading to smoother market functioning. Essentially, the hypothesis underscores the importance of transparency and information sharing in promoting financial stability and efficiency within markets.