Summary |
The book presents what is meant to be a plausible and accessible descriptive theory and empirical approach to the analysis of such financial market conditions. The information on the subject of bubble characteristic and theory offers a new step in a new direction. Development in this new direction requires an approach that appreciates the thinking behind the standard efficient market, random walk, and capital asset pricing models, but that also recognizes the total uselessness of these concepts when describing the extreme behaviour seen in the events that are loosely referred to as bubbles or crashes. The body of work that is known as behavioural finance, it seems, ends up being much closer to what is needed. And along these lines, the notion of a behavioral risk premium is introduced.
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