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Recent changes in farm policy have renewed interest in using marketing strategies based on futures and options markets to enhance the income of field crop producers. This article reviews the literature surrounding the dominant academic theory of the behavior of futures and options markets, the efficient market hypothesis. The following conclusion is reached: while individuals can beat the market, few can consistently do so. This conclusion is consistent with Grossman and Stiglitz’s model of market efficiency in which individuals who consistently earn trading returns have superior access to information or superior analytical ability. One implication is that, with few exceptions, the crop producers who survive will be those with the lowest cost of production since efforts to improve revenue through better marketing will have limited success. There do appear to be some successful marketing strategies. One is to base storage decisions on when a producer harvests the crop relative to the national harvest of the crop. Another is to base storage decisions on whether the current basis exceeds the cost of storage, and then to use hedging to assure an expected positive return.

In this paper we compare and contrast modern finance ( the de facto ruling paradigm of financial economics) with what is being called (most of the time) behavioral finance, and some time “the anomalies literature. ” The faithful of the ruling paradigm have marginalized behavioral finance by making it the “anomalies literature. ” But even the supposed proponents of behavioral finance are marginalizing themselves by clinging to the underlying tenets, forms, and methods of what is now called modern finance. They have allowed it to set the terms of the debate and made it the benchmark against all finance is not only judged, but also labeled “finance. ” But finance research is subject to the same “mistakes ” that behavioral finance attributes to practitioners, and it is these same “mistakes, ” perhaps more than the fierce attacks of the supporters of the ruling doctrine that are preventing behavioral finance from emerging as a new paradigm. In effect, the mere failure of behavioral finance is proof of its veracity and legitimacy. RESISTANCE IS FUTILE: THE ASSIMILATION OF BEHAVIORAL FINANCE I.