A Crisis of Beliefs

A Crisis of Beliefs Investor Psychology and Financial Fragility

Hardback (14 Aug 2018) | English

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Synopsis

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.

About the Publisher

Princeton University Press

Princeton University Press

We seek to publish the innovative works of the greatest minds in academia, from the most respected senior scholar to the extraordinarily promising graduate student, in each of the disciplines in which we publish. The Press consciously acquires a collection of titles--a coherent "list" of books--in each discipline, providing focus, continuity, and a basis for the development of future publications.

Book information

ISBN: 9780691182506
Publisher: Princeton University Press
Imprint: Princeton University Press
Pub date:
DEWEY: 330.9730931
DEWEY edition: 23
Language: English
Sales rank: 14708
Number of pages: x, 252
Weight: 544g
Height: 234mm
Width: 163mm
Spine width: 27mm