tag:blogger.com,1999:blog-31427364.post6154282846107927018..comments2024-03-26T03:52:23.395-07:00Comments on Housing Analysis: Greater Fool Theorymohicanhttp://www.blogger.com/profile/06094213357140749289noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-31427364.post-25779857750471122232007-09-11T19:50:00.000-07:002007-09-11T19:50:00.000-07:00The thing about greater fool games is that it is a...The thing about greater fool games is that it is a zero sum game (actually negative once we include misallocations). Surprisingly, many people willingly play the game with realizing this zero sum aspect. And by definition, everyone entering the game think that they are smarter than the next guy. The other thing to note is the speed at which these things can unravel.freakohttps://www.blogger.com/profile/06236681769619303395noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-14897588880688224302007-09-11T17:41:00.000-07:002007-09-11T17:41:00.000-07:00I loved reading that study a couple months ago bec...I loved reading that study a couple months ago because it quite succinctly puts our market into perspective.<BR/><BR/>The uniqueness bias at work in Vancouver.mohicanhttps://www.blogger.com/profile/06094213357140749289noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-68728337118866009032007-09-11T16:43:00.000-07:002007-09-11T16:43:00.000-07:00Here is another quote from Robert Shiller's HISTOR...Here is another quote from <A HREF="http://cowles.econ.yale.edu/P/cd/d16a/d1610.pdf" REL="nofollow">Robert Shiller's HISTORIC TURNING POINTS IN REAL ESTATE</A>:<BR/><BR/><I>"Analysis of past booms seems to indicate that investors in both the stock market and the housing market seem often not to understand the supply response to price increases. These are normal intelligent people, why would they repeatedly make the same mistake again and again? There seems to be what I will call a uniqueness bias, a tendency for investors to overestimate how unique an investment they favor is, failing to take account of the inevitable supply response to high prices. The uniqueness bias is reflected in quite a number of anomalies of human judgment that psychologists have documented, including the “representativeness heuristic,” “overconfidence,” “wishful-thinking bias,”<BR/>“spotlight effect” and “self-esteem bias.” </I>Palyhttps://www.blogger.com/profile/06562337008923595962noreply@blogger.com