Market Crashes and Collective Rationality

Sudden crashes are common features of financial markets, worldwide. Those sudden crashes cannot be explained by current economic theories, which essentially rely on changes in fundamentals. Psychological factors are a natural alternative explanation to those phenomena. In this book, we investigate those psychological factors and their impact on financial crises, with a strong focus on collective rationality. Concepts such as herd behavior and pack behavior are studied, together with their implications for financial stability.

Autorentext

Patrick Leoni is Professor of Finance at Euromed Management (France), after receiving his Ph.D. from the University of Minnesota. His research is about beliefs and learning effects on asset pricing. He has over 20 publications in leading scholastic journals in Finance, Psychology and Mathematics, and he received many awards for his research.