Last Updated 1:01 p.m. The Royal Swedish Academy of Sciences said the three, through separate research, had laid the foundation of the current understanding of asset prices. Shiller, 67, is the Sterling Professor of Economics at Yale University and is well-known as a co-creator of the Case-Shiller index, a leading measure of U.S. residential real estate prices. Beginning in the 1960s, Fama showed that prices change so quickly and efficiently to reflect new information that investors can't outperform markets in the short term. This was a breakthrough that helped popularize index funds, which invest in broad market categories instead of trying to pick individual winners. Two decades later, Shiller reached a separate conclusion: That over the long run, markets can often be irrational, subject to booms and busts and the whims of human behavior. Hansen developed a statistical method to test theories of asset pricing. The three economists shared the $1.2 million prize, the last of this year's Nobel awards to be announced. "Their methods have shaped subsequent research in the field and their findings have been highly influential both academically and practically," the academy said. Monday morning, Hansen said he received a phone call from Sweden while on his way to the gym. He said he wasn't sure how he'll celebrate but said he was "still working on taking a deep breath." "People told me they thought I might win," Shiller told The Associated Press. I discounted it. Probably hundreds have been told that. Of the three winners, Fama was the first to expand the knowledge of how asset prices move. His work helped revolutionize investing by illustrating how hard it was to predict the movement of individual stock prices in the short run. It was a finding that spurred wider acceptance of index funds as an investment tool. Shiller showed that in the long run, stock and bond markets tend to behave more irrationally than economic fundamentals would suggest. That encouraged the creation of institutional investors, such as hedge funds, that take bets on market trends. In the late 1990s, Shiller argued that the stock market was overvalued. "And lo and behold, he was proven right" when the dot-com bubble burst in 2000, said Nobel committee secretary Peter Englund. "He also predicted for a long time that the housing market was overvalued, and again he was proven right," Englund said. The U.S. housing market suffered a crash in 2007 that helped fuel the global financial crisis. Englund said he believes the three laureates agree on the findings for which they were awarded, even though Fama and Shiller have different "interpretations of the real world." "It's no secret that for Eugene Fama, the sort of null hypothesis is that markets work well and he is willing to believe that until he is proven otherwise, whereas for Robert Shiller, I think his null hypothesis is that there are periods of excessive optimism and pessimism," Englund said. In the 1980s, Hansen developed a statistical method to better assess theories such as those of Fama and Shiller. Fama said his work came at a time when computers were starting to be used by statisticians and economists. Many of them were studying stock prices because they were the most easily available data. On Monday morning, Fama was preparing to teach his first class as a Nobel laureate. Asked whether his students would get any break, he said: "We'll see, but they're going to get an exam tomorrow anyway. They paid their money; they're going to get the full pill. Shiller noted that if regulated properly, global finance is "at the core of our civilization." "It seems to some people, it's selfish and money-grubbing," he said. It doesn't really have to be that way. The financial crisis we've been through is traumatic, but we're learning from it. For example, he said many students from other countries are able to study in the United States because of financial aid made possible by investments. He also noted that the Consumer Financial Protection Bureau, established as a result of the recession, is holding finance to higher standards. All awards will be presented to the winners amid royal pageantry on Dec. 10, the anniversary of Nobel's death in 1896.