Conclusion

Financial market efficiency is an important topic in the world of Finance. While most financiers believe the markets are neither 100% efficient, nor 100% inefficient, many disagree where on the efficiency line the world's markets fall.

It can be concluded that in reality a financial market can’t be considered to be extremely efficient, or completely inefficient.

The financial markets are a mixture of both, sometimes the market will provide fair returns on the investment for everyone, while at other times certain investors will generate above average returns on their investment.
The Dumb Agent Theory states that many people making individual buying and selling decisions will better reflect true value than any one individual can. In finance this theory is predicated on the efficient-market hypothesis (EMH). One of the first instances of the Dumb Agent Theory in action was with the Policy Analysis Market (PAM); a futures exchange developed by DARPA While this project was quickly abandoned by the Pentagon, its idea is now implemented in futures exchanges and prediction markets such as Intrade, News futures and Predictify.

While first mentioned strictly by name in relation to PAM in 2003, the Dumb Agent Theory was originally conceived (as the Dumb Smart Market) by James Surowiecki in 1999 Here, Surowiecki differentiated from the EMH stating that it "doesn't mean that markets are always right." Instead, he argues that markets are subject to manias and panics because "people are always shouting out" their stock picks.

This, in turn, results in other investors worrying about these picks and become influenced by them, which ultimately drives the markets (irrationally) up or down. His argument states that if market decisions were made independently of each other, and with the sole goal of being correct (as opposed to being in line with what others are choosing), then the markets would produce the best choice possible and eliminate biases such as Groupthink, the Bandwagon effect and the Abilene Paradox.