Irrational exuberance drives asset prices from "summary" of Irrational Exuberance by Robert J. Shiller
The idea that irrational exuberance drives asset prices is a notion that has been observed throughout history. It is a concept that highlights the role of human emotions and behavior in influencing the value of assets in the financial markets. When investors become overly optimistic and enthusiastic about the prospects of an asset, they may bid up its price to levels that are not supported by its underlying fundamentals. This phenomenon can lead to bubbles in asset prices, where the value of an asset becomes detached from its intrinsic worth. In such instances, investors may continue to buy into the asset based on the belief that its price will keep rising, leading to further price increases and reinforcing the cycle of irrati...
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