Princeton University Press
A Crisis of Beliefs: Investor Psychology and Financial Fragility
Key Metrics
- Nicola Gennaioli
- Princeton University Press
- Hardcover
- 9780691182506
- 9.3 X 6.1 X 1 inches
- 1.25 pounds
- Business & Economics > Economic History
- English
Secure TransactionBook Description
How investor expectations move markets and the economy
The collapse of Lehman Brothers in September 2008 caught markets and regulators by surprise. Although the government rushed to rescue other financial institutions from a similar fate after Lehman, it could not prevent the deepest recession in postwar history. A Crisis of Beliefs makes us rethink the financial crisis and the nature of economic risk. In this authoritative and comprehensive book, two of today's most insightful economists reveal how our beliefs shape financial markets, lead to expansions of credit and leverage, and expose the economy to major risks.
Nicola Gennaioli and Andrei Shleifer carefully walk readers through the unraveling of Lehman Brothers and the ensuing meltdown of the US financial system, and then 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.
A must-read for anyone seeking insights into financial markets, A Crisis of Beliefs shows how even the smartest market participants and regulators did not fully appreciate the extent of economic risk, and offers a new framework for understanding today's unpredictable financial waters.
Author Bio
Nicola Gennaioli is professor of finance at Bocconi University in Italy and his research interests cover economic analysis, behavior finance and investor psychology.
- Some of the recently published papers by Prof Gennaioli include
- Identity, Beliefs, and Political Conflict (with G. Bonomi and G. Tabellini) The Quarterly Journal of Economics, forthcoming
- Trust and Insurance Contracts (with F. Lopez de Silanes, R. La Porta, and A. Shleifer) The Review of Financial Studies, forthcoming
- Memory and Representativeness (with P. Bordalo, C. Coffman, F. Schwerter, and A. Shleifer) Psychological Review, forthcoming
- Over-Reaction in Macroeconomic Expectations (with P.Bordalo, Y. Ma, and A. Shleifer) American Economic Review, 2020, 110, 2748-2782
- Memory, Attention and Choice (with P. Bordalo and Andrei Shleifer) The Quarterly Journal of Economics, 2020, 135, 1399–1442
- Diagnostic Bubbles (with P. Bordalo, Andrei Shleifer, and Spencer Yongwook Kwon) Journal of Financial Economics, forthcoming
- Memory and Reference Prices: An Application to Rental Choice (with P. Bordalo, R. La Porta, and A.Shleifer) American Economic Review, P&P, 2019
Source: University Bocconi
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