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Novel market inefficiencies from early Victorian times

  • Andrew Odlyzko (a1)

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.

Corresponding author
A. Odlyzko, School of Mathematics, University of Minnesota, Minneapolis, mn 55455, USA, email:
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Comments from the anonymous referees and the editor are gratefully acknowledged. The Bank of England Archive graciously allowed the publication of the data presented here. The many other individuals and institutions that assisted in the larger research project of which this is a part are thanked at

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