Bubbles and (self-fulfilling) equilibria with sunspots can occur even in asset prices that pay a certain, non-random and possibly even constant income

Financial instability is illustrated by this surprising finding. If an asset (financial or real estate) pays a non-random income that is known in advance, the price of this asset may differ at equilibrium from its fundamental value (which is simply the ratio of income to the interest rate) randomly, following a process that may exhibit bubbles and then a collapse of these bubbles. The asset’s price may therefore follow a complex stochastic process, even though its income is not stochastic and may even be constant. So uncertainty over the fundamental value of an asset is not a precondition for its price to follow a highly irregular stochastic trajectory.