# Feedback loop

- Canonical URL: https://www.gerhardmerk.de/feedback-loop
- Post ID: 587927
- Modified: 2023-07-25T21:00:39+00:00
- Language: en

## Definition

Unless otherwise defined, the fact that investors - cannot process all information and - therefore rely on simple anchoring rules when making decisions. - The obvious anchor is the recent evolution of asset prices, such as stock prices. Quotations that rise over a number of years then serve investors as a decisive motive for further decisions. This can lead to a self-reinforcing movement, in the course of which a second round of price increases causes even higher stock prices, which then continues in an infinite loop. - See stock bubble, animal spirits, behavioral finance, bubble, speculative, domino effect, euphoria phase, headline hysteria, herd behavior, information overload, real estate bubble, imitation, informal. - Cf. ECB Monthly Bulletin, November 2008, p. 99 f. (explaining the loop from behavioral finance). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

## Machine-readable

- Generator: Merk Knowledge 1.1.1