Cognitive Scaffold

Preparing your thinking workspace

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MENTAL MODEL · M1800

Greater Fool Theory

Greater Fool Theory
BusinessHigh supportFinance
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Version 1.0.0 · Updated 2026-07-30

CORE DEFINITION

Price depends not on value but on whether there is a 'greater fool' willing to pay a higher price. As long as you can sell to the next fool, you can make money.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

Bubble surfing. You can participate in bubbles (because they are very profitable), but you must always stay alert: who is the next fool? If you can't find one, then you are the fool.

anchor

Anchor fast decisions

The 'greater fool theory' in investing: buying not because of intrinsic value but because you expect to sell at a higher price to a 'greater fool'. The mechanism is that price is supported by expectations of a future buyer, not by fundamentals.

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Greater_fool_theoryZH · Explicit
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