Publication Date
10-2024
Abstract
We propose a simple higher-order rational greater-fool bubble model, where the period-1 information structure is motivated by an “information leakage” story, reminiscent of Rubinstein’s (1989) email game. Our nth-order bubble model requires only n + 2 states, and is thus simpler than that in Conlon (2004), which required n^2 + 5n + 5 states. Our model is also related to the two-agent-type case of the Araujo and Doblas-Madrid’s (2022) model, and we argue that our model might therefore not capture “momentum,” though simple extensions of it may be able to.
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