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The idea that informational market efficiency relies entirely on the rationality of all investors is somewhat accurate. This concept is closely linked to the Efficient
The idea that informational market efficiency relies entirely on the rationality of all investors is somewhat accurate. This concept is closely linked to the Efficient Market Hypothesis (EMH) and its various degrees of market efficiency: weak, semi-strong, and strong. While investor rationality is seemingly important for markets to accurately represent asset values based on current information, the necessity for each investor to exhibit a market's efficiency rationality can be contested. An analysis of EMH suggests that the collective behaviour of market players pushes the market toward efficiency more than the rationality of individual investors. This theory asserts that highly organised capital markets, such as the New York Stock Exchange, achieve notable efficiency because of their inherent competitiveness. Motivated by potential profits, investors aim to spot undervalued stocks, aiding the market in swiftly responding to fresh data and positioning prices nearer to their actual worth
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