The hypothesis of economic rationality gave an important connotation to market efficiency, because it was the basis for carrying out the construction of modern knowledge in finance standard. Which allowed the development of the most important knowledge in finance, such as the arbitrage pricing theory of Miller and Modigliani, portfolio optimization of Markowitz, the theory of pricing of financial assets of Sharp, Lintner and Sharp and the Black, Scholes, and Merton option pricing model. (Pompian, 2006 and Lo, 2005). At this point, these advances offer a sophisticated mathematical approach to explaining what happens in real life. As a result of these advances, individuals who trade stocks and bonds use these theories under the assumption that the assets they invest in have a similar value to the prices they pay. In this way, based on market efficiency, current prices reflect all relevant information, so trading stocks with the aim of outperforming the benchmark or producing above-average returns will not be possible without taking above-average risks, because arbitrage would raise prices to their real or fundamental value (Malkiel, 2003). Arbitrage could be defined as a guaranteed trading opportunity without the risk of making a profit. In the event that an asset is undervalued, this will quickly attract the attention of rational investors who will take advantage by purchasing the asset at a bargain price in large quantities, pushing the price to its fundamental value so that the expected return is achieved . is relatively higher than the risk incurred (Barberis and Thaler, 2002 and Ritter, 2003). Conversely, if an asset is overvalued, rational investors would sell short, in order to take advantage of the good...... middle of paper ......e intrinsic value of a portfolio of certain Internet stocks represented half the market value in the late 1990s. Therefore, if the financial analyzes were accurate, these huge technology companies were only worth 50 percent of their current prices. This could then have been avoided by institutional investors taking short positions in Internet stocks. But despite this, it had little effect, as the majority of market participants are individual investors who are overwhelmed by good times, which puts increased buying pressure on this stock, driving up prices. price (Thaler, 1999, pp 15). Therefore, this does not make sense according to rational equilibrium, since the US Internet stock market has taken more into account people's emotions rather than fundamentals, so investors are not completely rational because their behavior also explains the functioning of the market..