Andreas AldrianEfficient Capital Markets ? Theory, Empiricism and the Economics of Information ApproachIn the past two decades, researchers of efficient capital market have been forced to find a new approach to better explain market movements. The push towards finding alternative methods of study came from recent economic crises where classic theory failed to give a satisfactory explanation despite those models being confirmed in most of the empirical tests conducted over five decades. Since the assumptions are restrictive, application of these models to the real world is complicated. Furthermore, the models assume that the information is freely accessible, that market participants are price-takers and there are no transaction costs incurred. In light of the above, there is no difficulty in achieving models which are consistent and easily verified as most of the uncertainties have been factored out.In comparison, the real world appears different than the assumptions made by the classic model: information is not always freely accessible and asymmetrically distributed among investors, market participants have irrational instead of homogenous expectations and there are of course transaction costs.A modern model such as the Behavioural Finance and the Economics of Information Approach breaks up the restrictive assumption of the classic models and incorporate more realistic approaches by using, for example, a model used in psychology. But, since these models are young and general assumptions are applied, there are still lots of questions that remain unanswered.The conclusion of modern models, in comparison to the classic definition of efficient capital markets, is that markets are not efficient.This paper gives the reader an overview of theoretical studies dealing with efficient capital markets, how they hold against empirical testing and what it means to the classic assumptions of efficient capital markets.