Noisy market hypothesis

The Noisy Market Hypothesis is a concept that extends the traditional Efficient Market Hypothesis (EMH) by incorporating the idea that financial markets often operate under conditions of noise—random fluctuations and disturbances that can affect asset prices. While the EMH suggests that prices fully reflect all available information, the Noisy Market Hypothesis suggests that the presence of noise can lead to mispricing of assets, making markets less than perfectly efficient.