Assume that investors are irrational and that collectively they are similarly irrational

No investor can be fully said to be rational, and in this case we assume that the investors are irrational and collectively similarly irrational. When investors are irrational it is argued that the market will be less productive and mispriced securities. The oppurtuinties to make profit will be not utilized if there is irrationality. This will lead to a loss in market efficiency. Market efficieny is the degree to which market prices reflect all avalilabe and relevant informations. And investors can be said to be the key factor or force that can make it efficient too. Taking advantage of inefficiencies can ignite to higher market efficiency. Proper investment statgety and investments can lead to this. And it is also important to ensure that the market is liquid. Other key factor that can lead to market efficiency is the degree of risk, the higher the risk, higher the benefits. Hence it is important to take appropriate risks at the right time and if it is successful, the benefits can be huge, and this can lead to more market efficiency as a whole.