Lạc Quan Tếu (Irrational Exuberance)

Irrational Exuberance is Robert Shiller's foundational argument that speculative financial bubbles — in stocks, and in later editions, housing — are not primarily driven by rational reassessment of underlying value, but by self-reinforcing social and psychological dynamics: feedback loops of rising prices, media amplification, herd behavior, and culturally transmitted "new era" stories that convince ordinary people a given asset class has permanently changed and can only go up. The book was first published in 2000, near the peak of the dot-com stock bubble, and Shiller's warnings about overvaluation were quickly validated by the subsequent crash — a track record that gave the book enduring credibility and led to expanded editions addressing the 2000s U.S. housing bubble as well.

Shiller's core diagnostic tool throughout the book is the cyclically adjusted price-to-earnings ratio (CAPE, sometimes called the Shiller P/E), which smooths corporate earnings over a ten-year period to strip out short-term noise and provide a longer-run read on whether markets are historically overvalued or undervalued. He uses this measure to argue that late-1990s U.S. stock valuations were far outside historical norms in a way that couldn't be justified by any coherent story about permanently higher future growth or lower risk.

Beyond the valuation argument, the book's lasting contribution is its account of the mechanisms that generate bubbles in the first place: feedback loops where rising prices generate stories about a "new era," which draw in more buyers, which push prices higher still, until the story eventually becomes unsustainable and reverses just as forcefully on the way down. Shiller pays close attention to the role of the media, of cultural narratives, and of social psychology — how people's investment decisions are shaped by conversations with others and by a desire to conform, not by careful independent analysis of fundamentals.

The book closes with policy and institutional reflections — proposals aimed at making financial markets and institutions more resilient to these psychological dynamics — and situates itself within the broader behavioral finance and behavioral economics movement that Shiller helped establish as a credible academic alternative to the pure efficient-markets view of financial theory, work later recognized with a shared Nobel Memorial Prize in Economic Sciences.