Market prices fluctuate wildly as rational traders battle market forces.
The article introduces a new model for asset pricing that focuses on how prices move towards equilibrium. Unlike traditional models, this one shows that prices are rarely in perfect balance due to random forces and traders trying to profit from mispriced assets. Traders have perfect knowledge but face uncertainty due to noise traders. The market clears through a market maker, and the opportunity for risky assets is unpredictable. The study concludes that market prices can't go below zero, but there's no limit to how high they can go in the long run.