We construct a model of bubbles where an asset can be used as collateral primarily due to higher-order uncertainty … fool” exists who will purchase it at a much higher price. We show that such bubbles can lead to inefficient overinvestment …

conditions, there can be rational bubbles. Hence, we provide a microfoundation for bubbles that relies on a frictionless infinite …

Bubbles are omnipresent in lab experiments with asset markets. Most of these experiments were conducted in environments … smaller bubbles if human traders expect algorithmic traders to be present. …

derived from extreme value theory (EVT). Specifically, in a multi-asset study covering 30 years of stock, bond, commodity and …

We develop a model of rational bubbles based on leverage and the assumption of an imprecisely known maximum market size … lend to traders with limited liability in a bubble is endogenous. Bubbles reduce welfare of future investors. We provide … general conditions for the possibility of bubbles depending on uncertainty about market size, traders' degree of leverage and …