Speculative Bubble Burst

cho, hyejin (2016): Speculative Bubble Burst.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: externalities, speculative bubbles, heterogeneous beliefs, overconfidence, speculative bubble burst, equilibrium with inertia
• Subjects: D - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying Principles; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D52 - Incomplete Markets; D - Microeconomics > D6 - Welfare Economics > D62 - Externalities; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D84 - Expectations ; Speculations

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