Here’s where the efficient markets hypothesis gets you into trouble. The idea that everyone will manage their 401k plan optimally is really not right. What was discovered by some of the behavioral finance research is people are inertial. They don’t do anything. If they have to sign up for the plan, they won’t do it. If they do sign up, they'll put their money in whatever asset seems to be recommended and leave it there the rest of their lives. You would think it’s kind of obvious, that some people aren't that interested in managing their portfolios.
If you press Gene Fama or Lars Hansen on this, I suspect they would give in. They’d have to admit that's what the evidence shows. But it’s not their habit to emphasize it. That’s where we differ, perhaps. It's what do you want to emphasize that divides them from me.
Gene Fama once told me that he is actually sympathetic to behavioral finance and that in fact he is proud to have accepted many of the journal articles or written referee reports accepting publication for articles that are important in the field. And I believe that's true. I think he's an open-minded person.