Formal Parallels Among Derivatives, Ponzi Processes, and Bubbles: A Behavioral Contingency Analysis

Given that all economic phenomena consist of human behavior, how can behavioral science help us understand them? We are particularly interested in understanding the phenomena that have the greatest impact on our lives and on society, like those that involve large-scale property transfers—buying and selling, lending and borrowing, aggregation and partitioning of property, and government interventions in these. This paper shows how the application of behavioral contingency analysis can advance such an understanding.