Regulating Irrational Exuberance and Anxiety in Securities Markets

47 Pages Posted: 3 Dec 2003

See all articles by Peter H. Huang

Peter H. Huang

University of Colorado Law School

Abstract

This paper analyzes the regulatory implications of irrational exuberance and anxiety in securities markets. U.S. federal securities laws mandate the disclosure of certain information, but regulate only the cognitive form and content of that information. An important and unstudied question is how to regulate securities markets where some investors respond not only cognitively to the form and content of information, but also emotionally to the form and content of information. This paper investigates that question when some investors feel exuberance or anxiety that is unjustified by cognitive processing of the available information. This paper develops the implications for mandatory securities disclosure of irrational exuberance and anxiety.

Keywords: Anxiety, irrational exuberance, mandatory disclosures, securities regulation

JEL Classification: K22, G28, D81

Suggested Citation

Huang, Peter H., Regulating Irrational Exuberance and Anxiety in Securities Markets. THE LAW AND ECONOMICS OF IRRATIONAL BEHAVIOR, Francesco Parisi and Vernon Smith, eds., University of Chicago Press. Available at SSRN: https://ssrn.com/abstract=474661 or http://dx.doi.org/10.2139/ssrn.474661

Peter H. Huang (Contact Author)

University of Colorado Law School ( email )

Colorado Law
401 UCB
Boulder, CO 80309
United States
303 492-4563 (Phone)
303-492-1200 (Fax)

HOME PAGE: http://lawweb.colorado.edu/profiles/profile.jsp?id=456

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