When aren't they efficient?

The approach to markets, especially betting markets, supposes that they are efficient or trending towards efficiency.  There is a specific circumstance where markets no longer trend toward efficiency, that is basically never discussed.

Walk into a convince store, look at the dozen drinks on display.  How many individual choices are there?  Not 12,  but 13.  1 for each drink, and 1 for not purchasing a drink at all.  Take 130 people, each day each of the dozen drinks gets bought 10 times, and 10 times the "no purchase" is exercised.

10 people day after day are not buying drinks.  If they are $1 each then after a year you have 10 people with $365 that they are willing to use on drinks if there was one they liked.  This (potentially) opens up a brand new niche in the market, as the daily savings allows for a new product to enter the market.  One day on the shelves a specialty drink will appear, aimed at satisfying this segment.  Perhaps it will be priced at $2, perhaps $20.

Strip away the savings, instead of a dollar spent every time, give each of the 130 people a coupon for 1 drink that expires at the end of each day.  Now there is no build up of savings and so no incentive to create a more expensive drink for those with particular (or peculiar) tastes.

This is the major flaw in electoral "markets", votes can't be rolled over in anticipation of a better candidate 2, 4 or 40 years down the line.  Marginalized groups tend to stay marginalized and powerful groups powerful thanks to the absence of this mechanism.

Now we are potentially living in an even more dangerous time.  Financial markets have become so entangled that there is no fundamental way to "save" outside of it.  Sell stocks because you are worried about the economy?  What are you going to do with the cash?  The solvency of banks is directly tied to the solvency of the US Treasury, which is tied back to the strength of the economy.

Whenever someone makes the following mistake, "markets aren't worried about default because if they were interest rates on government debt would be higher" simply ask them this "Where should I put my money if I am afraid of a government default in my country?".