Market efficiency and natural selection in a commodity futures market

While the literature usually justifies informational efficiencyin the context of rationality, this article shows informationalefficiency by applying the evolutionary idea of natural selection.In a dynamic futures market, speculators are assumed to merelyact upon their predetermined trading types (buyer or seller),their predetermined fractions of wealth allocated for speculation,and their inherent abilities to predict the spot price, reflectedin their distributions of prediction errors with respect tothe spot price. This article shows that the proportion of timethat the futures price equals the spot price converges to onewith probability 1.