Markets exhibit collective behavior from "summary" of Why Stock Markets Crash by Didier Sornette
The concept of markets exhibiting collective behavior is fundamental to understanding the dynamics of financial markets. It is the idea that individual decisions are not made in isolation but are influenced by the actions of others. This leads to the emergence of patterns and trends that can be observed in market data. Collective behavior in markets can be seen in various forms, such as herding behavior, where investors follow the actions of others without necessarily understanding the reasons behind those actions. This can lead to the formation of bubbles, where assets are overvalued due to excessive optimi...
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