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Conclusion
The jargon of economics and finance contains numerous colorful expressions to denote a market-determined asset price at odds with any reasonable economic explanation. Such terms as tulipmania, bubble, chain letter, Ponzi scheme, panic, crash, and financial crisis immediately evoke images of frenzied and irrational speculative activity. Lately, the same terms, or modern versions of them—herding, irrational exhuberance, contagion, and self-generating equilibrium—have been used by media, academics, and policymakers to paint the crises of 1997, 1998, and 1999. These words are always used to argue the irrationality of financial markets in particularly volatile periods. Many of these terms have emerged from specific speculative episodes, which have been sufficiently frequent and important that they underpin a strong current belief that key capital markets generate irrational and inefficient pricing and allocational outcomes. The proponents of such arguments can hardly ever resist the invocation of three famous bubbles—the Dutch
