The Importance of Social Emergence in Finance

We should think of bubbles and crashes as the financial version of these ant death spirals. And yet there's still a logic to them at the individual level that we can understand why individuals are behaving the way they are. So I can give you a different example of an emergent outcome in finance, which is that people often trade actively. They will invest in active mutual funds or on their own account. But when retail investors are trading actively, that on average they underperform.