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Speculative Bubble Burst

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  • cho, hyejin

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

  • cho, hyejin, 2016. "Speculative Bubble Burst," MPRA Paper 72531, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:72531
    as

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    References listed on IDEAS

    as
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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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