Literature Review

Stefan Palan ()

Chapter Chapter 2 in Bubbles and Crashes in Experimental Asset Markets, 2009, pp 11-65 from Springer

Abstract: Abstract The role of bubbles in financial markets is intricately connected to the question of informational efficiency. The reason is both that bubbles above and below fundamental values are a violation of market efficiency, and that the fundamental value itself and deviations from it can only be defined with reference to a framework of informational efficiency in a market (cp. Roll’s critique in Roll (1977)). Because of this observation, this section starts with a short introduction to the topic of market efficiency (Sect. 2.1.1 below), briefly reviews evidence of market inefficiency (Sect. 2.1.2), and finally spends some time on the specific anomaly of price bubbles (Sect. 2.1.3).

Keywords: Rational Expectation; Future Market; Short Selling; Option Market; Efficient Market Hypothesis (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-642-02147-3_2

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DOI: 10.1007/978-3-642-02147-3_2

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