Michael Lewis's Flash Boys has caused quite a stir among traders, investors, and regulators - click here and watch FT video below for further details. Lewis's basic allegation is that high-frequency traders are manipulating the market to their advantage with high-powered computers and complex algorithms. New York's Attorney General calls it "Insider Trading 2.0".
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.