Irrational Exuberance Quotes

“Irrational exuberance is the psychological basis of a speculative bubble. I define a speculative bubble as a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increases and bringing in a larger and larger class of investors, who, despite doubts about the real value of an investment, are drawn to it partly through envy of others’ successes and partly through a gambler's excitement.”
― Robert J. Shiller, Irrational Exuberance

“How errors of human judgment can infect even the smartest people, thanks to overconfidence, lack of attention to details, and excessive trust in the judgments of others, stemming from a failure to understand that others are not making independent judgments but are themselves following still others—the blind leading the blind.”
― Robert J. Shiller, Irrational Exuberance

“In the future, we will surely have even bigger such bubbles, each built up around its new and different new era story, and we will have to invent new names for them.”
― Robert J. Shiller, Irrational Exuberance

“If we exaggerate the present and future value of the stock market, then as a society we may invest too much in business start-ups and expansions, and too little in infrastructure, education, and other forms of human capital.”
― Robert J. Shiller, Irrational Exuberance

“Just what is a speculative bubble? The Oxford English Dictionary defines a bubble as “anything fragile, unsubstantial, empty, or worthless; a deceptive show. From 17th c. onwards often applied to delusive commercial or financial schemes.” The problem is that words like show and scheme suggest a deliberate creation, rather than a widespread social phenomenon that is not directed by any central impresario.”
― Robert J. Shiller, Irrational Exuberance

“The word bubble creates a mental picture of an expanding soap bubble, which is destined to pop suddenly and irrevocably. But speculative bubbles are not so easily ended; indeed, they may deflate somewhat, as the story changes, and then reflate.”
― Robert J. Shiller, Irrational Exuberance

“People who thought there was a bubble, and that prices were too high, find themselves questioning their own earlier judgments, and start to wonder whether fundamentals are indeed driving the price increase.”
― Robert J. Shiller, Irrational Exuberance: Revised and Expanded Third Edition

“Certainly some researchers are thinking more realistically about the market’s prospects and reaching better-informed positions on its future, but these are not the names that grab the headlines and thus influence public attitudes.”
― Robert J. Shiller, Irrational Exuberance

“Is the market high only because of some irrational exuberance — wishful thinking on the part of investors that blinds us to the truth of our situation?”
― Robert J. Shiller, Irrational Exuberance

“I also hope to challenge financial thinkers to improve their theories by testing them against the impressive evidence that suggests that the price level is more than merely the sum of the available economic information, as is now generally thought to be the case.”
― Robert J. Shiller, Irrational Exuberance

“In a broad sense, this book, from its first edition in 2000, has been about trying to understand the change in thinking of the people whose actions ultimately drive the markets. It is about the psychology of speculation, about the feedback mechanism that intensifies this psychology, about herd behavior that can spread through millions or even billions of people, and about the implications of such behavior for the economy and for our lives. Although the book originally focused directly on current economic events, it was, and is, about how errors of human judgment can infect even the smartest people, thanks to overconfidence, lack of attention to details, and excessive trust in the judgments of others, stemming from a failure to understand that others are not making independent judgments but are themselves following still others—the blind leading the blind.”
― Robert J. Shiller, Irrational Exuberance: Revised and Expanded Third Edition

“People have realised that, in light of historical statistics, they have been too fearful of stocks. Armed with this new knowledge, investors have now bid stock prices up to a higher level.”
― Robert J. Shiller, Irrational Exuberance

“Another aspect of overconfidence is that people tend to make judgments in uncertain situations by looking for familiar patterns and assuming that future patterns will resemble past ones, often without sufficient consideration of the reasons for the pattern or the probability of the pattern repeating itself. This anomaly of human judgment, called the representativeness heuristic, was demonstrated in a number of experiments by behavioral economists Tversky and Kahneman. For example, these researchers asked people to guess the occupation, from a list of occupations, of people with a given personality description. If the description given was that the person was artistic and sensitive, they tended to choose conductor or sculptress, rather than laborer or secretary, disregarding entirely the fact that the former occupations are extremely rare and thus that the answers are much less likely to be right.18 It would be wiser, in answering such questions, almost never to guess the occupation conductor or sculptress, since the base rate probabilities are so low. But”
― Robert J. Shiller, Irrational Exuberance: Revised and Expanded Third Edition

“Yet some basic tendency toward overconfidence appears to be a robust human character trait: the bias is definitely toward over-confidence rather than underconfidence.”
― Robert J. Shiller, Irrational Exuberance: Revised and Expanded Third Edition

“Google Hangouts,”
― Robert J. Shiller, Irrational Exuberance: Revised and Expanded Third Edition