Bubbles, Human Judgment, and Expert Opinion

  • Shiller R
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Abstract

The widespread public disagreement about whether the US stock market has been undergoing a speculative bubble since about 1995 reflects underlying disagreements about how to view human judgment and intellect. The essence of a speculative bubble is the familiar feedback pattern - from price increases to increased investor enthusiasm to increased demand and, hence, to further price increase. This article asks: 1. whether this kind of feedback of price change to further price change is plausible at all, and 2. whether it is consistent with what is known about investment experts who, apparently, commonly go along with bubbles or, at least, do not act to offset bubbles.

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Authors

  • Robert J. Shiller

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