It's been a looong time since I've studied financial economics but I do think there's an active research literature around this topic (under the topic of market

It's been a looong time since I've studied financial economics but I do think there's an active research literature around this topic (under the topic of market microstructure maybe?). If I recall correctly (and again, it's been a while), I think the amount of passive funds has to be quite substantial for markets to be really bad at reflecting value over the long run.