This might link back to the market via the Greater Fool Theory. The idea behind the blue eyes puzzle is that everyone else is modeled with less information than you, and they model everyone else with less information than THEM, and they have models of everyone else who model everyone else with less information than THEM, etc. Another way of expressing that someone has less information than you is that they are a greater fool. In essence, everyone believes that there is a huge chain of “Greater fools” to take advantage of who think “I know this stock isn’t worth this much, but I also know there is another person who DOESN’T know this, and I can make a dollar more by selling it to him.”
But once it’s common knowledge, you no longer think there are greater fools to take advantage of, and the economic bubble crashes.
There are definitely some similarities, but I’m not sure if you can actually make any better predictions of stock prices off of this. If you think you have come up with a testable prediction, you can certainly try it out in one of the free test markets that are available to see if it works out.
This might link back to the market via the Greater Fool Theory. The idea behind the blue eyes puzzle is that everyone else is modeled with less information than you, and they model everyone else with less information than THEM, and they have models of everyone else who model everyone else with less information than THEM, etc. Another way of expressing that someone has less information than you is that they are a greater fool. In essence, everyone believes that there is a huge chain of “Greater fools” to take advantage of who think “I know this stock isn’t worth this much, but I also know there is another person who DOESN’T know this, and I can make a dollar more by selling it to him.”
But once it’s common knowledge, you no longer think there are greater fools to take advantage of, and the economic bubble crashes.
There are definitely some similarities, but I’m not sure if you can actually make any better predictions of stock prices off of this. If you think you have come up with a testable prediction, you can certainly try it out in one of the free test markets that are available to see if it works out.