"I'm not sure how much the additional pessimism that "bubble illusion" causes matters for people's outlook about their current situation, and thus how much it affects the willingness to spend -- that seems to be related more to actual values today than to how much was lost. But it may affect the goals people set for when they will feel "whole" once again, and thus have an effect on spending through that channel. In any case, the illusion does seem to be present."

"As we continue to monitor the markets for evidence of Quote Stuffing and Strange Sequences (Crop Circles), we find that there are dozens if not hundreds of examples to choose from on any given day. As such, this page will be updated often with charts demonstrating this activity.

The common theme with the charts shown on this page is they are obviously all generated in code and are algorithmic. Some demonstrate bizarre price or size cycling, some demonstrate large burst of quotes in extremely short time frames and some will demonstrate both. In most cases these sequences are from a single exchange with no other exchange quoting in the same time frame."

"Despite the availability of very detailed data on financial market, agent-based modeling is hindered by the lack of information about real trader behavior. This makes it impossible to validate agent-based models, which are thus reverse-engineering attempts. This work is a contribution to the building of a set of stylized facts about the traders themselves. Using the client database of Swissquote Bank SA, the largest on-line Swiss broker, we find empirical relationships between turnover, account values and the number of assets in which a trader is invested. A theory based on simple mean-variance portfolio optimization that crucially includes variable transaction costs is able to reproduce faithfully the observed behaviors. We finally argue that our results bring into light the collective ability of a population to construct a mean-variance portfolio that takes into account the structure of transaction costs."

"Of particular note, they have a great line where they say (my close paraphrase) that "to an outside observer who is not aware of the underlying objective function, it might appear that some agents become risk-loving." So when you say "We know that excessive risk taking was a factor in the financial crisis, but why people were willing to take on excessive risk?", you are ignoring a point emphasized by Keynes, and many others, but actively disdained by free-market fundamentalists: there is no a priori reason to believe in general that behavior that is individually rational is collectively rational. What, after all, is "excess" risk?"

"The essential problem is the tragedy of the commons. Global warming and concern about CO2 emissions is a global, social problem that has extraordinary long term impacts, but when you look at it on an individual level, the marginal returns that a selfish individual can gain by ignoring the greater good far exceeds the marginal cost to that individual in the short run. In the long run, though, everyone pays more."

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