Market efficiency implies that the market reacts quickly and in the correct direction to new information. There are three 'forms' of the hypothesis that relate to the set of information that is reflected in price. The Efficient Market Hypothesis doesn't say the market is right, only unbiased . An efficient market is one in which prices fully reflect available information. This hypothesis has been tested more than any other in the social sciences.
Efficiency is a matter of degree.
Tests indicate that prices do not reflect insider information, but that most other informaation is reflected in price. Note that not all information will be reflected in price even in an efficient market if there are transaction costs. When we are dealing with uncertainty we have to talk in terms of 'expected' returns. All expectations are just weighted averages of probabilities and something else. We have thus far discussed individual assets.