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Speculative Bubble Burst

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Abstract

Central to market fundamentals are three ideas: (1) Nominal money (2) Dividend (3) Existing stock. In connection with the cumulative dividend stream criterion of fundamental and noise movement, the conception of sequentially stable Markov process is grounded on the theory of bubbles. This paper firstly embodies the origin of speculative bubble burst with overconfidence. Then, unique equilibrium with inertia is re-illuminated by the overconfidence

Suggested Citation

  • Hye-jin Cho, 2016. "Speculative Bubble Burst," Documents de travail du Centre d'Economie de la Sorbonne 16021, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:16021
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    externalities; speculative bubbles; heterogeneous beliefs; overconfidence; speculative bubble burst; equilibrium with inertia;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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