Two Pillars of Asset Pricing

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Subfields: Finance

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Extrapolation and bubbles (2018, unknown): “Some recent research has questioned whether bubble-like price episodes are actually irrational (Pastor and Veronesi 2006) or whether bubbles in the sense of prices undeniably and substantially exceeding fundamentals over a period of time ever exist (Fama 2014).”
Bubbles for Fama (2019, background): “-- Eugene F. Fama, June 20161 I. Introduction The eminent financial economist Eugene F. Fama does not believe that security prices exhibit price “bubbles,” which he defines in his Nobel Lecture as an “irrational strong price increase that implies a predictable strong decline” Fama 2014, p. 1475).”
Psychology-based Models of Asset Prices and Trading Volume (2018, background): “However, in many real-world contexts, it is hard to determine the sensible price of an asset, making it difficult to decide whether a particular episode constitutes a bubble and leading some observers to question whether bubbles, as defined above, even exist (Fama, 2014).”