Dispelling the Myth of the Naive Investor during the British Railway Mania, 1845–46

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    Anecdotal evidence from the British Railway Mania and other historical financial bubbles suggests that many investors during such episodes are naive, thus contributing to the asset price boom. Using extensive investor records, we find that very few investors during the Railway Mania can be categorized as such. Although some interpretations of the Mania suggest that naive investors were expropriated by railway insiders, our evidence is inconsistent with this view as railway insiders contributed substantial amounts of capital, and their investments performed no better than those made by other experienced investors.



    Original languageEnglish
    Number of pages39
    Pages (from-to)3-41
    JournalBusiness History Review
    Journal publication dateMar 2012
    Issue number1
    Publication statusPublished - Mar 2012

    ID: 893999