5min chapter

The Joe Walker Podcast cover image

Rational Minds Part 3: Rethinking Bubbles - Vernon Smith

The Joe Walker Podcast

CHAPTER

How to Quantify Future Price Expectations

In your book with Stephen Gerstad, rethinking housing bubbles, you describe the momentum traders as myopically rational. Are we able to quantify that characterization or is it just words? Well, our way of quantifying it is to simply hypothesize that their willingness to pay for shares is related to the rate of change in price. That's kind of a simple theoretical way of modeling them. Most people out there are not going to be quite that simple.

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