Market Crashes without External Shocks [Revised]

Authors: 
Sergiu Hart & Yair Tauman
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.

Date: 
December, 1996
Published in: 
Journal of Business 77 (2004), 1-8
Number: 
124