Speculative Fever: Investor Contagion in the Housing Bubble

Patrick Bayer, Kyle Mangum and James W. Roberts

No 22065, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Historical anecdotes of new investors being drawn into a booming asset market, only to suffer when the market turns, abound. While the role of investor contagion in asset bubbles has been explored extensively in the theoretical literature, causal empirical evidence on the topic is virtually non-existent. This paper studies the recent boom and bust in the U.S. housing market, establishing that many novice investors entered the market as a direct result of observing investing activity of multiple forms in their own neighborhoods and that these “infected” investors performed poorly relative to other investors along several dimensions.

JEL-codes: D40 D84 R30 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-ure
Note: AP IO PE
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Citations: View citations in EconPapers (15)

Published as Patrick Bayer & Kyle Mangum & James W. Roberts, 2021. "Speculative Fever: Investor Contagion in the Housing Bubble," American Economic Review, American Economic Association, vol. 111(2), pages 609-651, February.

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Journal Article: Speculative Fever: Investor Contagion in the Housing Bubble (2021)
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