Mutual Illusions and Financing New Technologies: Two-Sided Informational Cascades (revised version Aug 11, 2003)

Sanditov, Bulat, Cowan, Robin and Kool, Clemens (2002). Mutual Illusions and Financing New Technologies: Two-Sided Informational Cascades (revised version Aug 11, 2003). UNU-MERIT Research Memoranda. UNU-MERIT.

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  • Sub-type Working paper
    Author Sanditov, Bulat
    Cowan, Robin
    Kool, Clemens
    Title Mutual Illusions and Financing New Technologies: Two-Sided Informational Cascades (revised version Aug 11, 2003)
    Series Title UNU-MERIT Research Memoranda
    Volume/Issue No. 6
    Publication Date 2002
    Publisher UNU-MERIT
    Language eng
    Abstract A model in which agents on both sides of the market are subject to informational cascades is examined. In an uncertain environment with asymmetric information agents tend to be overoptimistic about the state of the world, a result that fits with empirical evidence on financing new technologies. This overoptimism based on mutual illusions makes the system vulnerable to two-sided bubbles, and may be one of the reasons behind 'dot com' crash.
    Copyright Year 2002
    Copyright type All rights reserved
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    Created: Fri, 13 Dec 2013, 12:42:50 JST