Bubbles and crashes: A vicious cycle of self-fulfilling investor sentiment

When traders expect an asset price to go up, they buy more, raising aggregate demand and driving up prices, write Te Bao, Cars Hommes and Tomasz Makarewic

Information Ambiguity, Market Institutions and Asset Prices: Experimental Evidence

We explore how information ambiguity and traders’ attitudes toward such ambiguity affect expectations and asset prices under three different market institutions. Specifically, we test the prediction of Epstein & Schneider (2008) that information ambiguity will lead market prices to overreact to bad news and to underreact to good news. We find that such an asymmetric reaction exists and is strongest in individual prediction markets. It occurs to a lesser extent in single price call markets. It is weakest of all in double auction markets, where buyers’ asymmetric reaction to good/bad news is cancelled out by the opposite asymmetric reaction of sellers

A Millennial-Scale Tephra Event-Stratigraphic Record of the South China Sea since the Penultimate Interglacial

AbstractLarge volcanic eruptions have significant impacts on climate and environmental changes. The deposition of tephra in marine sediments may serve as an eruption recorder, but it has not been extensively studied in the western Pacific. This study explored a millennial-scale tephra event-stratigraphy with multiple indicators in a sediment core collected from the eastern South China Sea (SCS) basin. The magnetic susceptibility (MS), Fe and Mn concentrations determined by X-ray fluorescence (XRF), and identification of individual ash particles were used to identify tephra layers and reconstruct the history of volcanic activity. Nine visible volcaniclastic units (VVU) and two cryptotephra layers have been identified based on their distinct features, as manifested by high MS, Fe, and Mn concentrations and single-peak grain size distribution. The VVUs and cryptotephra layers reveal elevated volcanic activities. Using the radiocarbon age model and oxygen isotope stratigraphy, these episodes could roughly correspond to the following periods: 1-11 ka, 16-17 ka, 27-31 ka, 41-42 ka, 45-46 ka, 49-50 ka, 77-80 ka, 90-91 ka, 97-99 ka, 116-126 ka, and 132-140 ka. The alkenone-derived SST has significant glacial cycles and good synchronicity with other SCS SST records, which could partially help build the preliminary age model. Despite possible age errors larger than 1 kyr, the discovery and timing of tephra layers provide a preliminary framework to further investigate the impact of historical volcanic eruptions on climate changes