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Speculative Bubbles - A Behavioral Approach

Author

Listed:
  • Dedu Vasile

    () (Academia de Studii Economice, Bucuresti, FABBV)

  • Turcan Ciprian Sebastian

    () (Doctorand Academia de Studii Economice, FABBV Scoala doctorala)

  • Turcan Radu

    () (Universitatea din Oradea, Facultatea de Stiinte Socio-Umane)

Abstract

The purpose of this paper is to explain briefly from a behavioral point of view, the appearance and the development of speculative bubbles in financial markets. In the first part of the paper, we have presented the most known speculative bubbles among the history and the principal factors causing them (structural, cultural and behavioral factors). In the second part of the paper we have briefly presented the four main stages of developing speculative bubbles. In the last part of the paper we have concluded that besides the general opinion that bubbles make more harm to investors and economies, the human history has provided us the lesson that some of the bubbles have offered us genuine collective social gains: Apollo program, Human Genome Project and the Dot.com bubbles in the early 2000s. As some studies reflect, besides of the fact the some investors have lost all their money during those bubbles (Dot.com), nowadays we all enjoy the IT infrastructure realized with all those heaps of money that were frenetically invested in.

Suggested Citation

  • Dedu Vasile & Turcan Ciprian Sebastian & Turcan Radu, 2012. "Speculative Bubbles - A Behavioral Approach," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 798-802, July.
  • Handle: RePEc:ora:journl:v:1:y:2012:i:1:p:798-802
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    File URL: http://anale.steconomiceuoradea.ro/volume/2012/n1/115.pdf
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    Cited by:

    1. Oscar Pérez Rodriguez, 2014. "Inversión y endeudamiento en Colombia: un análisis de financiación y sostenibilidad," REVISTA CIFE, UNIVERSIDAD SANTO TOMÁS, September.

    More about this item

    Keywords

    Bubbles; Phases; Behavioral Biases; Smart Money; Euphoria; Collective Social Gain;

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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