In an incomplete financial market model, we study a flow in the space of equivalent martingale measures and the corresponding shifting perception of the fundamental value of a given asset. This allows us to capture the birth of a perceived bubble and to describe it as an initial submartingale...

Financial bubbles have been present in the history of financial markets from the early days up to the modern age. An asset is said to exhibit a bubble when its market value exceeds its fundamental valuation. Although this phenomenon has been thoroughly studied in the economic literature, a...