Editing Greater fool theory (section)

==Examples==

In real estate, the greater fool theory can drive investment through the expectation that prices always rise.<ref>{{Cite web |date=12 July 1986 |title='Greater Fool Theory' Can Lead To Expensive Home Investment |url=https://www.chicagotribune.com/1986/07/12/greater-fool-theory-can-lead-to-expensive-home-investment/ |access-date=6 March 2015 |website=Chicago Tribune}}</ref><ref>{{Cite web |date=17 February 2015 |title=What is the Greater Fool Theory? (with pictures) |url=http://www.wisegeek.com/what-is-the-greater-fool-theory.htm |access-date=6 March 2015 |publisher=Wisegeek.com}}</ref> A period of rising prices may cause lenders to underestimate the risk of default.<ref>{{Cite web |date=21 July 2010 |title=The Greater Fool Theory: Managing and Modeling Risk - The Finance Professionals' Post |url=http://post.nyssa.org/nyssa-news/2010/07/the-greater-fool-theory-managing-and-modeling-risk.html |access-date=6 March 2015 |publisher=Post.nyssa.org |archive-date=5 February 2011 |archive-url=https://web.archive.org/web/20110205185254/http://post.nyssa.org/nyssa-news/2010/07/the-greater-fool-theory-managing-and-modeling-risk.html |url-status=dead }}</ref>

In the [[stock market]], the greater fool theory applies when many investors make a questionable investment, with the assumption that they will be able to sell it later to "a greater fool". In other words, they buy something not because they believe that it is worth the price, but rather because they believe that they will be able to sell it to someone else at an even higher price.<ref>{{Cite web |title=Greater Fool Theory Definition |url=http://www.investopedia.com/terms/g/greaterfooltheory.asp |access-date=6 March 2015 |publisher=Investopedia}}</ref>

Art is another commodity in which speculation and privileged access drive prices, not intrinsic value.  In November 2013, [[hedge fund]] manager [[Steven A. Cohen]] of [[SAC Capital]] was selling at auction artworks that he had only recently acquired through private transactions. Works included paintings by [[Gerhard Richter]] and [[Rudolf Stingel]] and a sculpture by [[Cy Twombly]]. They were expected to sell for up to $80&nbsp;million. In reporting the sale, ''[[The New York Times]]'' noted that "Ever the trader, Mr. Cohen is also taking advantage of today’s active art market where new collectors will often pay far more for artworks than they are worth."<ref>{{Cite news |last1=Vogel |first1=Carol |last2=Lattman |first2=Peter |date=30 October 2013 |title=Steven A, Cohen to Sell Works at Sothebys and Christies |work=[[The New York Times]] |url=https://www.nytimes.com/2013/10/31/arts/design/steven-a-cohen-to-sell-works-at-sothebys-and-christies.html |access-date=6 March 2015}}</ref>

[[Cryptocurrencies]] have been characterized as examples of the greater fool theory.<ref>{{Cite journal |last1=Polasik |first1=Michal |last2=Piotrowska |first2=Anna |last3=Wisniewski |first3=Tomasz Piotr |last4=Kotkowski |first4=Radossaw |last5=Lightfoot |first5=Geoff |date=2014 |title=Price Fluctuations and the Use of Bitcoin: An Empirical Inquiry |url=http://dx.doi.org/10.2139/ssrn.2516754 |journal=SSRN Electronic Journal |doi=10.2139/ssrn.2516754 |s2cid=219377958 |issn=1556-5068|url-access=subscription }}</ref><ref>{{Cite magazine
| archive-url= https://web.archive.org/web/20210129113541/http://governance40.com/wp-content/uploads/2018/12/adriano-1.pdf
| archive-date= 29 January 2021
| quote = Anyone who bought Bitcoin in the last two months of 2017, when the price reached almost $20,000, has been played for a greater fool.
| first = Andreas | last= Andriano
|title= A Short History of Crypto Euphoria
|url=http://governance40.com/wp-content/uploads/2018/12/adriano-1.pdf 
|access-date=11 January 2023 |url-status= unfit
| magazine= Finance & Development
| date= June 2018
| pages= 20–21
}}</ref> Numerous economists, including several [[Nobel laureates]], have described cryptocurrency as having no intrinsic value whatsoever.<ref name="BMH">{{Cite news |last=Quiggin |first=John |date=16 April 2013 |title=The Bitcoin Bubble and a Bad Hypothesis |work=The National Interest |url=http://nationalinterest.org/commentary/the-bitcoin-bubble-bad-hypothesis-8353 |url-status=live |archive-url=https://web.archive.org/web/20141022081554/http://nationalinterest.org/commentary/the-bitcoin-bubble-bad-hypothesis-8353 |archive-date=22 October 2014 |df=dmy-all}}</ref><ref name="Shiller">{{Cite news |last=Shiller |first=Robert |date=1 March 2014 |title=In Search of a Stable Electronic Currency |work=The New York Times |url=https://www.nytimes.com/2014/03/02/business/in-search-of-a-stable-electronic-currency.html |url-status=live |archive-url=https://web.archive.org/web/20141024120222/http://www.nytimes.com/2014/03/02/business/in-search-of-a-stable-electronic-currency.html?_r=0 |archive-date=24 October 2014 |df=dmy-all}}</ref><ref name="4Nobels">{{Cite news |last=Wolff-Mann |first=Ethan |date=27 April 2018 |title='Only good for drug dealers': More Nobel prize winners snub bitcoin |work=Yahoo Finance |url=https://finance.yahoo.com/news/good-drug-dealers-nobel-prize-winners-snub-bitcoin-184903784.html |url-status=live |archive-url=https://web.archive.org/web/20180612141128/https://finance.yahoo.com/news/good-drug-dealers-nobel-prize-winners-snub-bitcoin-184903784.html |archive-date=12 June 2018}}</ref>

In contrast, in times of [[hyperinflation]] or in remote regions, the prices of necessities can be so exorbitant that relative to normal [[Market (economics)|markets]] these prices may seem arbitrary. Yet the local cost of doing business relative to the price in these regions, as well as the necessity to feed and shelter oneself in a hyper-inflationary crisis, justifies through profit or actual benefit the "foolish" price. In these cases, there is no "bubble", even though prices are very high.