So, a relatively small exogenous shock can move an economy from one equilibrium to another one and sometimes provoke a devastating crisis. The second approach is based on the view that human nature is prone to irrationality. According to Hyman Minsky, the financial system itself has a tendency to generate economic instability through endogenous waves of euphoria and anxiety.
3 Myopia and herd-like behavior rather than rational long-term calculations are common and they lead to endogenous cycles of manias and panics.