American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Speculative Fever: Investor Contagion in the Housing Bubble
American Economic Review
vol. 111,
no. 2, February 2021
(pp. 609–51)
Abstract
Historical anecdotes abound of new investors being drawn into a booming asset market, only to suffer when the market turns. While the role of investor contagion in asset bubbles has been explored extensively in the theoretical literature, causal empirical evidence on the topic is much rarer. This paper studies the recent boom and bust in the US housing market and establishes that many novice investors entered the market as a direct result of observing investing activity of multiple forms in their own neighborhoods and that "infected" investors performed poorly relative to other investors along several dimensions.Citation
Bayer, Patrick, Kyle Mangum, and James W. Roberts. 2021. "Speculative Fever: Investor Contagion in the Housing Bubble." American Economic Review, 111 (2): 609–51. DOI: 10.1257/aer.20171611Additional Materials
JEL Classification
- D84 Expectations; Speculations
- G12 Equities; Fixed Income Securities
- G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
- R31 Housing Supply and Markets