SPECULATIVE BUBBLES - A BEHAVIORAL APPROACH

The purpose of this paper is to explain briefly from a behavioral point of view, the appearance and the development of speculative bubbles in financial markets. In the first part of the paper, we have presented the most known speculative bubbles among the history and the principal factors causing them (structural, cultural and behavioral factors). In the second part of the paper we have briefly presented the four main stages of developing speculative bubbles. In the last part of the paper we have concluded that besides the general opinion that bubbles make more harm to investors and economies, the human history has provided us the lesson that some of the bubbles have offered us genuine collective social gains: Apollo program, Human Genome Project and the Dot.com bubbles in the early 2000s. As some studies reflect, besides of the fact the some investors have lost all their money during those bubbles (Dot.com), nowadays we all enjoy the IT infrastructure realized with all those heaps of money that were frenetically invested in.