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Federal Reserve Bank of Chicago
Economic Perspectives
Bubbles and Fools
Gadi Barlevy
Abstract

This article reviews the literature on greater-fool theories of bubbles, which argue that bubbles can arise if traders are willing to buy assets they know to be overvalued because they hope to later sell them at a profit to others. The author discusses two approaches that attempt to model this phenomenon and what these approaches imply for economic policy.


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Gadi Barlevy, "Bubbles and Fools" , Federal Reserve Bank of Chicago, Economic Perspectives, issue Q II, pages 54-76, 2015.
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Keywords: Bubbles; financial crisis
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