Friedman, Daniel; Aoki, Masanao - In: Bulletin of Economic Research 44 (1992) 4, pp. 251-79
This paper presents a new theory of bubbles, or discrepancies between the market clearing price and the fundamental value of an asset. In the authors' setting, Bayesian traders, oriented towards long-term gains, receive private information ("news") and also make inferences from noisy price...