On the afternoon of June 2, 2017, Professor Neil Pearson of the University of Illinois at urbana-champaign (UIUC) made an academic report entitled "Evidence about Bubble Mechanisms: Precipitating Event, Feedback Trading, and Social Contagion" in the conference room 429 of the main building.
In the report, professor Neil Pearson systematically described three components of the bubble mechanism: precipitating events, feedback transactions and social contagiousness. Professor Neil Pearson has verified the existence of these three factors in China warrants transcation bubble through brokerage account data. The increase of the stock transaction tax has led to a large number of investors transferring to the warrants market, which caused the key events of the bubble formation. The regression analysis of risk rate shows positive feedback transaction, while the feedback transaction's event trend is highly similar to that of bubble. Social contagiousness explains the new investors. At the same time, the estimated value of transactions generated by the feedback transaction and the number of new investors explained the size of the bubble.
