Stock Price Bubbles

Bubbles are recurrent economic phenomena that
frequently have far-reaching consequences for whole
economies, as was the case for the "dot-com bubble"
at the turn of the century or the recent real estate
bubbles. Clemens Eder examines whether stock price
bubbles actually exist and analyzes typical bubbles
episodes from the distant and recent past. The book
goes on to present the major types of explanatory
models: Traditional approaches are based on rational
expectations and symmetric information, demonstrating
that bubbles can occur even under these restrictive
assumptions. Newer models, on the other hand, allow
for irrational investors and/or asymmetric
information. Focusing on "noise trading" approaches,
several factors are identified that can lead to the
creation of bubbles. Finally, alternative
explanations derived from fields like catastrophe
theory or experimental economics are presented. The
book does not merely describe these models, but
critically analyzes, compares and evaluates them. It
thus represents an in-depth introduction to stock
price bubbles targeted at students, teachers and
researchers who are interested in capital market
theory and finance.

Autorentext

Clemens Eder studied International Business at the ViennaUniversity of Economics and Business Administration and at ESADEBarcelona. He obtained the CEMS Master's in InternationalManagement degree and received his university's "Talenta" awardfor his thesis. Currently, he is working in Corporate Accountingfor OMV Aktiengesellschaft in Vienna.

Klappentext

Bubbles are recurrent economic phenomena thatfrequently have far-reaching consequences for wholeeconomies, as was the case for the "dot-com bubble"at the turn of the century or the recent real estatebubbles. Clemens Eder examines whether stock pricebubbles actually exist and analyzes typical bubblesepisodes from the distant and recent past. The bookgoes on to present the major types of explanatorymodels: Traditional approaches are based on rationalexpectations and symmetric information, demonstratingthat bubbles can occur even under these restrictiveassumptions. Newer models, on the other hand, allowfor irrational investors and/or asymmetricinformation. Focusing on "noise trading" approaches,several factors are identified that can lead to thecreation of bubbles. Finally, alternativeexplanations derived from fields like catastrophetheory or experimental economics are presented. Thebook does not merely describe these models, butcritically analyzes, compares and evaluates them. Itthus represents an in-depth introduction to stockprice bubbles targeted at students, teachers andresearchers who are interested in capital markettheory and finance.