Andrei Shleifer

Who Is Andrei Shleifer?

Andrei Shleifer is a Harvard University professor and financial and behavioral economist. A past winner of the John Bates Clark Medal, given to top economists under age 40, Dr. Shleifer is a member of the vaunted Harvard-MIT axis of economic thinkers. Shleifer is frequently in the top rankings of economists, according to criteria such as the number of published works, number of citations, and number of journal pages.

Key Takeaways

  • Andre Shleifer is an economics professor at Harvard University, known for his work in behavioral finance and development economics.
  • Shleifer has had a prolific career in academic publishing and applied investment and consulting work. 
  • Shleifer’s research argues against theories of rational and efficient financial markets and emphasizes the role of legal institutions in financial development.

Life and Career

Dr. Shleifer, born in Russia in 1961, earned an undergraduate degree from Harvard and a Ph.D. from MIT. After teaching stints at Princeton and University of Chicago, he became part of the Harvard faculty. In 1991 he took an advisory role with the Russian government, helping to lead the country's economic reform after the collapse of the Soviet Union. At the same time, Harvard was sought out by the U.S. government to advise the Russian government. Shleifer's involvement with both Harvard and the Russian government culminated many years later in a conflict of interest scandal involving personal gains from investments in Russian securities. After an investigation, both Harvard and Shleifer were forced to pay fines in 2005 to bring the matter to an end. He lost his honorary title at Harvard but retained his tenure.


Dr. Shleifer is a prolific researcher and writer. He is most noted for his contributions to financial economics and development economics. 

Financial Economics

Shleifer’s work in financial economics focuses on the field of behavioral finance, exploring the ways in which cognitive bias and other behavioral effects impact financial market structure, performance, and returns on investments. He is a critic of the efficient markets hypothesis, arguing that the available evidence overwhelmingly contradicts the assumptions of rationality and rapid arbitrage in financial markets. Shleifer teaches and writes that in actual financial markets, investors and financial traders are less than fully rational and are limited by risk aversion, short time horizons, and agency problems.

Shleifer has written numerous articles and books modeling the implications of behavioral finance. Investopedia readers of this entry will be interested in a recent paper, "Bubbles for Fama," which he co-authored with Robin Greenwood and Yang You. Based on almost 90 years of U.S. industry asset return data and 30 years of international data, Shleifer and his co-researchers conclude that Eugene Fama is "correct in that a sharp price increase of an industry portfolio does not, on average, predict unusually low returns going forward," but that "such sharp price increases predict a substantially heightened probability of a crash..." These conclusions, particularly the latter one, can be useful over and over to investors who are inclined to bubble-watching and market-timing.

Development Economics

Shleifer’s work in development economics emphasizes the quality of legal institutions as a determining factor in financial and economic development across countries. In particular, he has argued that the historical origin of a country’s legal system in either common law or civil law is crucial in the kind of investor property rights, financial regulation, and general government efficiency that exist today. Along with his colleagues in the field, Shleifer’s research has shown that countries whose legal systems are based on common law display better investor protection, lighter government economic intervention, and more independent courts and judiciaries, and that these are in turn associated with more secure property rights, better contract enforcement, improved financial development, less corruption, better functioning labor markets, and smaller unofficial economies.

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  1. Journal of Financial Economics. "Bubbles for Fama." Accessed Dec. 6, 2020.