9 of 9 people found the following review helpful
If you read one book by Schiller this is the one, despite it being quite old by now,
This review is from: Irrational Exuberance (Paperback)
Economists have until rather recently refused to pay attention to emotions (driven by culture and psychology). Well by now, some cutting edge researchers have studied these phenomena for 20 years, but it is only during the last 10 years that these ideas have had any mainstream impact. And writing in 2011, I would say that these ideas do not yet have any major, systematic impact on economic and finance thinking.
This book is a book written by an economist who have realised the importance of these ideas for some time. The core question in the book is to try to understand the non-economic factors in society that create asset price bubbles. The book is well written and its author is aware of all the research done in the area. Off course the original edition was published in 2000 so the research has moved on and I would not consider the book cutting edge any more.
Still, I am not aware of any better book on the subject and I would consider this book a must read. Be sure to get hold of the second edition from 2005. Given the success of the predictions in the book I would not be surprised if we see a third edition. There are still bubbles waiting to burst (government bonds in the US, property prices in London, etc.). Still, a third edition is probably not shortly forthcoming given the fact that we are not really in a bubble economy in the US. So get hold of the second edition and read it.
The author has a more recent book called Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism (New in Paper). In my mind that book is vastly inferior to the older book. The more recent book deals with irrationality in economic behaviour in general, not just in financial markets.