Goldstein, Itay; Ozdenoren, Emre; Yuan, Kathy - In: Journal of Financial Economics 109 (2013) 2, pp. 566-582
We study a model in which a capital provider learns from the price of a firm's security in deciding how much capital to provide for new investment. This feedback effect from the financial market to the investment decision gives rise to trading frenzies, in which speculators all wish to trade...