Cover of Nicola Gennaioli, Andrei Shleifer: A Crisis of Beliefs

Nicola Gennaioli, Andrei Shleifer A Crisis of Beliefs

Investor Psychology and Financial Fragility

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English

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Book information

Princeton University Press

USA

2020

Paperback

264

Standard

317881

978-0-691-20223-5

0-691-20223-0

Economics

Annotation

How beliefs shape financial markets and expose the economy to major risksThe collapse of Lehman Brothers in September 2008 caught markets and regulators by surprise. Nicola Gennaioli and Andrei Shleifer walk readers through the unraveling of Lehman and the ensuing meltdown of the US financial system, and present new evidence to illustrate the destabilizing role played by the beliefs of home buyers, investors, and regulators. Using the latest research in psychology and behavioral economics, they present a new theory of belief formation that explains why the financial crisis came as such a shock to so many people—and how financial and economic instability persist.

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