Novel market inefficiencies from early Victorian times

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A previously unknown pricing anomaly existed for a few years in the late 1840s in the British government bond market, in which the larger and more liquid of two very large bonds was underpriced. None of the published mechanisms explains this phenomenon. It may be related to another pricing anomaly that existed for much of the nineteenth century in which terminable annuities were significantly underpriced relative to so-called 'perpetual' annuities that dominated the government bond market. The reasons for these mispricings seem to lie in the early Victorian culture, since the basic economic incentives as well as laws and institutions were essentially the familiar modern ones. This provides new perspectives on the origins and nature of modern corporate capitalism.

Original languageEnglish (US)
Pages (from-to)143-165
Number of pages23
JournalFinancial History Review
Issue number2
StatePublished - Aug 1 2017

Bibliographical note

Publisher Copyright:
© 2017 European Association for Banking and Financial History e.V.


  • Law of One Price counterexamples
  • pricing anomalies
  • violations of the Efficient Markets Hypothesis


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