Psychological Aspects of Market Crashes
This paper analyzes the sensitivity of market crashes to investors'psychology in a standard general equilibrium framwork. Contrary to the traditional view that market crashes are driven by large drops in aggregate endowments, we argue from a theoretical standpoint that individual anticipations of such drops are a necessary condition for crashes to occur, and that the magnitude or such crashes are poritively correlated with the level of individual anticipations of drops
|Date of creation:||2007|
|Date of revision:|
|Contact details of provider:|| Postal: Maynooth, Co. Kildare|
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