What is the Alternative Hypothesis to Market Efficiency?

In his Nobel speech, Eugene Fama claimed that critics have failed to offer a complete alternative to the efficient market hypothesis (EMH). More specifically, Fama stated, “Most important, the behavioral literature has not put forth a full blown model for prices and returns that can be tested and potentially rejected - the acid test for any model proposed as a replacement for another model.” Here I argue that Fama's complaint is too strong. The EMH can fail and there still be no model that meets Fama's criteria. This short paper explains why and offers a more reasonable alternative to the EMH based on the viewpoint that behavioral biases, though common, are state dependent.