Successor to efficient market hypothesis, this capital market theory looks at a market's progressions as complex dynamic processes similar to those explained by chaos theory. According to this model, as government policy, investor expectation, technological and financial innovation, and other such factors change over time, four types of markets emerge during different phases of economic cycle: steady state random walk, unstable transition, chaotic dynamics, or coherent cycles. It states that a stable probability distribution will show persistence over time, thus reasonable expectations of the market's performance may be computed.Proposed by Tonis Vaga (then a consultant with the US consulting firm Booz Allen & Hamilton) in his 1991 book 'Coherent Market Hypothesis' and developed in his 1994 book 'Profiting From Chaos.' Also called coherent market model or coherent market theory. See also capital market theories.