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We introduce the concept of “negative bubbles” as the mirror image of standard financial bubbles, in which positive feedback mechanisms may lead to transient accelerating price falls. To model these negative bubbles, we adapt the Johansen-Ledoit-Sornette (JLS) model of rational expectation...
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a misperceptions of probability approach in line with prospect theory over a neoclassical approach of the Quandt (1986 …
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