The Conceptual Model of Efficient Markets in Information Databases in Iran: Model of Efficient Markets in Information Databases

The Conceptual Model of Efficient Markets in Information Databases in Iran: Model of Efficient Markets in Information Databases

Mahshid Eltemasi (University of Tehran, Tehran, Iran)
DOI: 10.4018/IJABIM.2018070103

Abstract

The main purpose of this article is to conceptually model market efficiency of information databases in Iran. In order to achieve that, summarizing content analysis techniques was used by reviewing literatures and exploratory interviews. The study population in interviews consists of brokers selling databases in Iran. The bibliographical research has been done on efficient market related publications published in the 5-year period of 2011-2015, indexed on Science Direct, ProQuest and EBSCO information databases. It was found that fourth categories for information database efficient markets: Linearity is most important and then to order, are logic and rationality, and Information-centric, trading volume reached fourth place, so one can say the information database markets are efficient and therefore author(s) traced the conceptual model of efficient markets in Information Databases in Iran.
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1. Introduction

Information databases are important channels for scientific and research information retrieval, especially in recent years, and after web pages the majority of students and researchers use information databases to fulfill their information needs. On the other hand, most credible information databases are not free and access to their services requires certain costs for the consumers, Most of these costs are paid by universities and mother organizations, due to the high price of information databases, market information databases should be more considered, because a mistake in purchase can lead to a huge damage to them. So, information database markets similar to other markets, follows the rules governing markets, that one of the main of them is efficiency markets.

Efficient markets, are markets that show full response to the information (Le,2014) and benefits are over than costs. The efficient markets theory achieved its height of authority in academic domains around the 1970s. At that decade, the rational expectations mutation in economic theory was a new idea that occupied the center of attention. The idea that speculative wealth prices such as portion prices combine the best information about basic values and that prices change only because of good, sensible information meshed well with theoretical trends of the time.

The base of efficient markets, often is the efficient market hypothesis (EMH), is an investment theory that states it is impossible to “beat the market” because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information. According to the EMH, stocks always trade at their fair value on stock exchanges, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices. As such, it should be impossible to outperform the overall market through expert stock selection or market timing, and the only way an investor can possibly obtain higher returns is by purchasing riskier investments. The EMH proves that “market prices fully mirror all available information.” This idea has been developed by Samuelson and Fama in the 1960s. The EMH can be translated as follows: In an informational efficient market, price changes must be unpredictable if they are properly foretasted, that is, if they fully merge the information and expectations of all market contributors.

The EMH was developed as a theory to clarify why changes in safety prices appear to be random; meaning that it is not possible to forestall latter changes in security prices based on historical price motions. The EMH tries to explain this ‘model’ by purporting that the price of a specific security changes in response to information about that safety. This total proposition of the EMH is intuitive and as William Sharpe commented, the proposition is: that in a functioning safeties market, the prices of safeties will mirror forecasts based on all relevant and available information. This seems to be self-evident to most professional economists.

A fundamental deficit of EMH is its weakness to describe surplus volatility. While efficient market theory rest outstanding in financial economics, proponents of behavioral finance believe numerous biases, including irrational and rational behavior, drive investor’s decisions.

Efficient market is a common term in capital markets, but if accepted it as such as Malkiel (2003) defined it, the term of efficient market can be used for all of markets; He defined: Efficient markets, are markets that the price of goods show full response to the information, all of consumers have the same information, consumers and sellers decision making based on their information, and benefits are over than costs in transactions. Efficient markets do not allow financier to earn above average returns without accepting additional risks. Markets do not become efficient automatically. It is the actions of investors, sensing bargains and putting into effect schemes to beat the market, that make markets efficient. There is an internal contradiction in claiming that there is no possibility of beating the market in an efficient market and then requiring profit-maximizing investors to constantly seek out ways of beating the market and thus making it efficient.

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