A Crisis of Beliefs: Investor Psychology and Financial Fragility

Andrei Shleifer, John L. Loeb Professor of Economics at Harvard University, discussed his book A Crisis of Beliefs: Investor Psychology and Financial Fragility on December 3, 2018, at the Peterson Institute for International Economics. PIIE Senior Fellow Jeromin Zettelmeyer will chair the event and lead off a discussion with Shleifer.

The collapse of Lehman Brothers in September 2008 caught markets and regulators by surprise. Although the government rushed to rescue other financial institutions from a similar fate after Lehman, it could not prevent the deepest recession in postwar history. A Crisis of Beliefs argues that we must rethink the causes of the global financial crisis and the nature of economic risk. In this authoritative and comprehensive book, Shleifer and his coauthor Nicola Gennaioli at Bocconi University reveal how our beliefs shape financial markets, lead to expansions of credit and leverage, and expose the economy to major risks.

Andrei Shleifer is John L. Loeb Professor of Economics at Harvard University. Before joining Harvard in 1991, he taught at Princeton University and the University of Chicago Booth School of Business. Shleifer has worked in the areas of comparative corporate governance, law and finance, behavioral finance, as well as institutional economics. He is an editor of the Quarterly Journal of Economics and a fellow of the Econometric Society, the American Academy of Arts and Sciences, and the American Finance Association.