, while rational agents anticipate market crashes after large bubbles and drive prices back close to fundamental value …

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 bubbles with a hazard rate describing the collective buying pressure of noise traders …