Informationally Efficient Market

An informationally efficient market is a market for goods and/or services where all currently available information is priced into the good and/or service.

For instance, most goods aren’t in informationally efficient markets. Rather, most goods are “sticky” in their pricing, meaning they don’t change in response to every little piece of information.

Something like stocks though are the perfect example of informationally efficient markets. One wrong tweet can send investors into a flurry, causing stock prices to radically drop or rise in response. Likewise, smaller info-bombs regarding companies can result in smaller changes in their stock’s price.