In which context is the assertion of 'logical (economic theory)' applied?

The assertion of 'logical (economic theory)' is applied within the context of the Efficient Market Hypothesis (EMH). EMH posits that financial markets are "informationally efficient," meaning that asset prices reflect all available information at any given time. This theory relies on the idea that economic actors, whether they are individual investors or institutional players, act rationally and incorporate all relevant data into their decision-making processes.

The logical underpinning of EMH stems from classical economic principles, which suggest that when information is publicly available, it is quickly assimilated by the market participants, leading to market prices that are more or less accurate representations of intrinsic values. Therefore, in this context, the discussion revolves around how markets efficiently incorporate information, and any predictable patterns or mispricings are quickly exploited by traders, thereby nullifying the opportunities for consistent above-average returns.

While technical analysis, behavioral finance, and capital market theory also explore different aspects of market behavior and investment strategies, they do not center on the same principles of information efficiency as explained in the Efficient Market Hypothesis. Technical analysis looks at price movements and historical trends, behavioral finance examines psychological influences on investor behavior, and capital market theory focuses on portfolio management and pricing of risk. Thus, EM