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New Perspectives on Asset Price Bubbles$
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Douglas D. Evanoff, George G. Kaufman, and A. G. Malliaris

Print publication date: 2012

Print ISBN-13: 9780199844333

Published to Oxford Scholarship Online: April 2015

DOI: 10.1093/acprof:osobl/9780199844333.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 30 July 2021

Asset Bubbles

Asset Bubbles

Insights From Behavioral Finance

Chapter:
(p.318) Chapter 11 Asset Bubbles
Source:
New Perspectives on Asset Price Bubbles
Author(s):

Werner de Bondt

Publisher:
Oxford University Press
DOI:10.1093/acprof:osobl/9780199844333.003.0011

This chapter comments on the paper Overconfidence and Speculative Bubbles, by José A. Scheinkman and Wei Xiong. In their paper, Scheinkman and Xiong propose a behavioral-based model for studying asset price bubbles and trading volume based on heterogeneous beliefs generated by agents' overconfidence. The chapter presents a detailed overview of behavioral finance from the perspective of asset bubbles and challenges the notion that pure fundamentals and rationality drive decision-making and pricing. It suggests that behavioral issues must be more fully incorporated into decision-making models and concludes by discussing asset price bubbles in view of the financial crisis of the late 2000s.

Keywords:   overconfidence, José A. Scheinkman, Wei Xiong, asset price bubbles, trading volume, behavioral finance, rationality, decision-making, pricing, financial crisis

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