Market Crashes Without External Shocks

Center for Rationality DP-124

9 Pages Posted: 14 May 1997

See all articles by Sergiu Hart

Sergiu Hart

Hebrew University of Jerusalem - Center for the Study of Rationality

Yair Tauman

Tel Aviv University - Faculty of Management; SUNY at Stony Brook University, College of Arts and Science, Department of Economics

Date Written: December 1996

Abstract

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

Hart, Sergiu and Tauman, Yair, Market Crashes Without External Shocks (December 1996). Center for Rationality DP-124, Available at SSRN: https://ssrn.com/abstract=15115 or http://dx.doi.org/10.2139/ssrn.15115

Sergiu Hart (Contact Author)

Hebrew University of Jerusalem - Center for the Study of Rationality ( email )

Feldman Building
Givat-Ram
Jerusalem, 91904
Israel
+972-2-6584135 (Phone)
+972-2-6513681 (Fax)

HOME PAGE: http://www.ma.huji.ac.il/~hart

Yair Tauman

Tel Aviv University - Faculty of Management ( email )

P.O. Box 39010
Ramat Aviv
Tel Aviv 69972
Israel

SUNY at Stony Brook University, College of Arts and Science, Department of Economics

Stony Brook, NY 11794
United States

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