Yale University economics professor Robert Shiller become world famous by predicting the year 2000 stock market crash. He's been busy lately again in describing a new bubble in the making - the housing bubble.

Professor Shiller examines market volatility and its social-economical impact in his new book "Irrational exuberance", second edition. Here is how he defines bubble.

"Irrational exuberance is the psychological basis of a speculative bubble. I define a speculative bubble as a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, in the process amplifying stories that might justify the price increases and bringing in a larger and larger class of investors, who, despite doubts about the real value of an investment, are drawn to it partly through envy of others' successes and partly through a gambler's excitement."