Despite the thousands of articles and the millions of times that the word #bubble# has been used in the business press, there still does not appear to be a cohesive theory or persuasive empirical approach with which to study #bubble# and #crash# conditions. This book presents a plausible and accessible descriptive theory and empirical approach to the analysis of such financial market conditions. It advances such a framework through application of standard econometric methods to its central idea, which is that financial bubbles reflect urgent short side rationed demand. From this basic idea, an elasticity of variance concept is developed. It is further shown that a behavioral risk premium can probably be measured and related to the standard equity risk premium models in a way that is consistent with conventional theory. Interdisciplinary coverage of financial bubbles and crashes that surveys and critiques prior literature, then develops a totally new approach # The book covers the latest housing and credit crunch episode and can be read by an audience interested in finance # The bibliography is, as a result, notably broad and deep. INDICE: Part I. Background for Analysis: 1. Introduction; 2. Bubble stories; 3. Random walks; 4. Bubble theories; 5. Framework for investigation; Part II. Empirical Features and Results: 6. Bubble basics; 7. Bubble dynamics; 8. Money and credit features; 9. Behavioral risk features; 10. Crashes, panics, and chaos; 11. Financial asset bubble theory.