In this infographic, we discuss bubbles, not the kind that you buy at the dollar store, mind you, but the kind that can lose millions of dollars in asset value, and even crash entire economies. So what causes bubbles?
More recent theories on asset bubble formation suggest that they are likely sociologically driven events. While there is no clear agreement on what causes bubbles, there is evidence to suggest that they are not caused by bounded rationality or assumptions about the irrationality of others.
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