Psychological Aspects of Market Crashes



Psychological Aspects of Market Crashes

Patrick Leoni

National University of Ireland at Maynooth
Department of Economics

Maynooth, Co. Kildare, Ireland
e-mail:
[email protected]
phone: +353 1708 6420, fax: +353 1708 3934

Abstract

This paper analyzes the sensitivity of market crashes to investors’
psychology in a standard general equilibrium framework. 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 of such crashes are positively
correlated with the level of individual anticipations of drops.



More intriguing information

1. Program Semantics and Classical Logic
2. Types of Cost in Inductive Concept Learning
3. The name is absent
4. The name is absent
5. On Social and Market Sanctions in Deterring non Compliance in Pollution Standards
6. SOCIOECONOMIC TRENDS CHANGING RURAL AMERICA
7. Neural Network Modelling of Constrained Spatial Interaction Flows
8. Effects of a Sport Education Intervention on Students’ Motivational Responses in Physical Education
9. Nurses' retention and hospital characteristics in New South Wales, CHERE Discussion Paper No 52
10. Electricity output in Spain: Economic analysis of the activity after liberalization