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    Psychological Aspects of Market Crashes

    Leoni, Dr Patrick (2007) Psychological Aspects of Market Crashes. UNSPECIFIED. (Unpublished)

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    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 necessary condition for crashes to occur and that the magnitude of such crashes are positively correlated with the level of individual anticipations of drops.

    Item Type: Other
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 493
    Depositing User: Ms Sandra Doherty
    Date Deposited: 18 Apr 2007
    Refereed: No
    Use Licence: This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here

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