The following table lists Shleifer's 3 lines of defense for the efficient market hypothesis in the first column and empirical violations of these defenses in the second column. Match the line of defense with the empirical violation that best rejects it. State your answer as number-letter pairs. Provide the reasoning for each answer (1-2 sentences for each pair). Use each defense and violation only once.

Lines of defen Empirical violaaions se 1. If all traders are rational, market prices a. The disposition effect, and stock market will accurately reflect underlying fundamental values overreaction and subsequent mean reversion (as measured by De Bondt and Thaler, among others 2. Even if quasi-rational traders are present, |b. Excess stock price volatility and excess so long as their errors are uncorrelated they will cancel out and market prices still will reflect accurately underlying fundamental values trading volume; and high premiums for bearing risk (the equity premium puzzle) 3. Even when the errors of quasi-rational c. Prices of twin shares that fail to converge; and prices after equity carve- traders are systematic (i e., they are correlated), any resulting mispricig outs that fail to converge be viewed as an opportunity for risk-free profits by the rational traders and undone by arbitrage. Therefore, market prices still will reflect accurately underlying fundamental values