Asset Price Bubble Lesson Plan

Instructor: Christopher Sailus

Chris has an M.A. in history and taught university and high school history.

Through this lesson plan, students learn about asset price bubbles and how they have played out over history through working collaboratively to research and present on various historical asset collapses.

Learning Objectives

After this lesson, students will be able to:

  • Understand what an asset price bubble is
  • Explain the factors that create an asset price bubble
  • Explain a few of the theories for why they form


1 hour

Key Vocabulary

  • asset price bubble
  • greater fool theory
  • herd theory
  • discounted cash flow model
  • leverage
  • risk shifting

Curriculum Standards

  • CCSS.ELA-Literacy.RH.11-12.3

Evaluate various explanations for actions or events and determine which explanation best accords with textual evidence, acknowledging where the text leaves matters uncertain.

  • CCSS.ELA-Literacy.RH.11-12.4

Determine the meaning of words and phrases as they are used in a text, including analyzing how an author uses and refines the meaning of a key term over the course of a text.


  • Have students read the lesson Asset Price Bubble: Definition & Model
  • Stop students when they reach the 'Economic Models' heading. Hold a short discussion based on the material thus far to ensure students have grasped the concepts. Example discussion questions include:
    • What are asset price bubbles? Why do they form?
    • What generally happens when an asset price bubble bursts?
    • What do the 'greater fool theory' and the 'herd theory' tell us about human nature? Economics?
  • Have students finish reading the lesson, answering any new questions that arise.
  • Have students take the quiz to assess understanding.

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