Once consumers/investors decide that the risks are sufficiently low over the time horizon they care about, they will not mitigate risks over longer time horizons.
This isn't just a failing of an efficient market - it's a "failing" of any system with a time horizon.
Politics has similar incentives (election in 2012, who cares about 2013?), as does software development (who cares about code maintenance after I leave), management, etc.
Comments
Once consumers/investors decide that the risks are sufficiently low over the time horizon they care about, they will not mitigate risks over longer time horizons.
This isn't just a failing of an efficient market - it's a "failing" of any system with a time horizon.
Politics has similar incentives (election in 2012, who cares about 2013?), as does software development (who cares about code maintenance after I leave), management, etc.