The Big Idea
This book is concerned with the behavior of speculative markets, human vulnerability to error, and the instability of the capitalist system. It tries to comprehend the change in the thought processes of the people whose actions drive the markets.

It is about how even the smartest people can make errors of human judgment - in both the real estate sectors and the stock market - thanks to overconfidence, ignorance of details and too much trust in the judgments of others.

An update of the celebrated bestseller of the same name, this edition expounds on the argument that changing attitudes, irrational beliefs and foci of attention are extremely important factors in our economic lives because they cause so-called variations that have deeply-felt and wide-ranging effects. The author broadens the discussion to consider speculation in real estate as well as in the stock market.

Investing in capital markets of any kind in todays economy is inherently unstable, because it is subject to the human influences captured in irrational exuberance - a concept introduced and made famous by ex-American Federal Reserve Chairman Allan Greenspan to describe the behavior of stock-market investors.

About the Author
Robert J. Shiller - Robert Shiller is a well-known economist and Stanley B. Resor Professor of Economics at Yale University and holds a joint appointment with the Yale School of Management. He is best known for his book Irrational Exuberance, a New York Times bestseller, which predicted the burst of the stock market bubble in the late 1990s, and warns about the emergence of a housing bubble after the dot-com bubble burst in 2000.

A pioneer in the study of behavioral finance, he has organized a series of seminars in this field along with Richard Thaler, a professor at the University of Chicago. He is also the author of Macro Markets, which won the first annual Paul A. Samuelson Award of TIAA-CREF.

Born in 1946, Shiller obtained his B.A. from the University of Michigan in 1967, and his Ph.D. from MIT in 1972. He has taught at Yale since 1982 and previously held faculty positions at the Wharton School of the University of Pennsylvania and the University of Minnesota.

Long before he became famous for his book Irrational Exuberance, Shiller developed his thinking on this subject in a series of studies published in academic journals, most notably with an article entitled Do stock prices move too much to be justified by subsequent changes in dividends?, published in the American Economic Review in 1981.