This is what I mean by irrational

Courtesy AustinContrarian  Tue, 12/23/2008 - 2:44pm

A bubble exists when people are paying prices that make no sense.  "No sense" as in, "There's no way in hell that this asset will ever generate enough income to pay them back."

Here's  a nice illustration. 
The authors of this paper conducted an experiment with college students.

 They gave each student some money and some "stock."  Trading was divided into 10 periods.  During each period, students were allowed to trade stock.

 At the end of each period,...


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