Positive Feedback Investment Strategies and Destabilizing Rational Speculation
J. Bradford De Long,
Andrei Shleifer,
Lawrence Summers and
Robert Waldmann ()
Authors registered in the RePEc Author Service: James Bradford DeLong ()
No 2880, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
Analyses of the role of rational speculators in financial markets usually presume that such investors dampen price fluctuations by trading against liquidity or noise traders. This conclusion does not necessarily hold when noise traders follow positive-feedback investment strategies buy when prices rise and sell when prices fall. In such cases, it may pay rational speculators to try to jump on the bandwagon early and to purchase ahead of noise trader demand. If rational speculators' attempts to jump on the bandwagon early trigger positive-feedback investment strategies, then an increase in the number of forward-looking rational speculators can lead to increased volatility of prices about fundamentals.
Date: 1989-03
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (106)
Published as Journal of Finance, Vol. 45, No. 2, (June 1990), pp. 374-97.
Downloads: (external link)
http://www.nber.org/papers/w2880.pdf (application/pdf)
Related works:
Journal Article: Positive Feedback Investment Strategies and Destabilizing Rational Speculation (1990) 
Working Paper: Positive Feedback Investment Strategies and Destabilizing Rational Speculation (1990) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:2880
Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w2880
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().