Market participants estimate how prices and investment flows are likely to behave for new instruments, but their understanding becomes more detailed and more accurate only as behavior under a variety of economic conditions is observed, and the development of that understanding obviously takes time.
Under turbulent  BIS Review 26/2006  1  conditions, or when new information causes market participants to question their own investment strategies, their behavior may change rapidly, leading to rapid price changes that may seem outsized relative to changes in economic fundamentals. That was briefly the case recently in the market for synthetic collateralized debt obligations.