In this timely and prescient update of his celebrated 2000 bestseller, Irrational Exuberance, Robert Shiller returns to the topic gained him international fame: market volatility. Shiller breaks new ground in this second edition by laying out in even clearer and starker terms the market excesses that continue to destabilize the economy and disrupt our lives. Having predicted the stock market collapse that began just one month after the first edition was published, he now expands the book to cover other markets that have become volatile, particularly the recently red-hot housing market. He includes a full chapter on domestic and international housing prices in historical perspective. Shiller amasses impressive evidence to support his argument that the recent housing market boom bears many similarities to the stock market bubble of the late 1990s, and may eventually be followed by declining home prices for years to come, After stocks plummeted when the bubble burst in 2000, investors moved their money into housing. This precipitated the inflated real estate prices not only in America but around the world, Shiller maintains. Hence, irrational exuberance did not disappear-it merely reappeared in other settings. Building on the original edition Shiller draws out the psychological origins of volatility in financial markets this time folding real estate into his analysis. He broadens the evidence that investing in capital market of all kinds in the modern free-market economy is inherently unstable-subject to the profoundly human influences captured in Alan Greenspan?s now-famous phrase, irrational exuberance. The ultimate solution to this troubling condition, he maintains would involve better-designed public institutions such as a revamped social security system, new forms of insurance to protect people?s incomes and homes, and a broader array of investment options. As was true of its predecessor, the second edition of Irrational Exuberance is destined to be widely read, discussed, and debated.About the AuthorRobert J. Shiller is the Stanley B. Resor Professor of Economics at Yale University. He is author of The Financial Order: Risk in the 21st Century (Princeton) and Market Volatility and Macro Markets, which won the 1996 Paul A. Samuelson Award.Table of ContentsChapter 1 The Stock Market in Historical Perspective Chapter 2 The Real Estate Market in Historical Perspective Part IM Structural Factors Chapter 3 Precipitating Factors: The Capitalist Explosion, the Internet, and Other Events Chapter 4 Amplification Mechanism: Naturally Occurring Ponzi Processes Part II Cultural Factors Chapter 5 The News Media Chapter 6 New Era Economic Thinking Chapter 7 New Eras and Bubbles around the World Part III Psychological Factors Chapter 8 Psychological Anchors for the Market Chapter 9 Herd Behavior and Epidemics Part IV Attempts to Rationalize Exuberance Chapter 10 Efficient Market, Random Walks, and Bubbles Chapter 11 Investor Learning-and Unlearning Part V A Call to Action Chapter 12 Speculative Volatility in a Free Society