Market Crashes Without External Shocks
Center for Rationality DP-124
9 Pages Posted: 14 May 1997
Date Written: December 1996
It is shown here that market crashes and bubbles can arise without external shocks. Sudden changes in behavior may be the result of endogenous information processing. Except for the daily observation of the market, there is no new information, no communication and no coordination between the participants.
JEL Classification: C70, D82, D83, G10
Suggested Citation: Suggested Citation