The legends of the Mississippi and South Sea bubbles persist today as warnings against the inevitability of irrational exuberance in financial markets. However, because the details of these early financial crises have been somewhat exaggerated, it has proven difficult for historians to separate fact from myth. The question remains whether investors behaved irrationally or sensibly in the face of the events of the early 18th century. It appears that the lack of sophistication of investors and the harmful effects of herd behavior are partly responsible for the unsustainable rise in prices. Some argue that “irrational exuberance is the psychological basis of a speculative bubble.” However, many historians have denied that the investors acted in a fit of "irrational exuberance", believing instead that they reacted reasonably to the information available to them. It seems that a combination of these two theories would best explain the extraordinary initial popularity of these two projects. It is important, before examining the events of the Mississippi and South Sea bubbles, to address the different definitions of the word “bubble.” According to the Dictionary of Political Economy (1926), the first modern definition of a bubble is: “any unhealthy enterprise accompanied by a high degree of speculation”. This suggests that the investor is basing their commitment on an imprudent or irrational assumption. However, Kindleberger seems to take the presence of irrationality out of the equation, defining a bubble as "an upward price movement over an extended range that then implodes." It is therefore difficult to know whether the very manifestation of a bubble presupposes the existence of investor irrationality. Before categorizing the victims......middle of article......first Bubbles: The Fundamentals of Early Manias (Cambridge: MIT Press, 2000).• Hoppit, Julian, “The Myths of the Bubble of the South Seas”, Transaction of the Royal Historical Society, Sixth Series, Vol. 12 (2002), pp. 141-65.• Kindleberger, Charles and Robert Z. Aliber, Manias, Panics and Crashes: A History of Financial Crises (New York: Palgrave Macmillan, 2011).• MacKay, Charles, Memoirs of Extraordinary Popular Delusions and the Madness of crowds (London: Office of the National Illustrated Library, 1852).• Marietta, Morgan, “The Historical Continuum of Financial Illusion” The American Economist, Vol. 40, no. 1 (spring 1996), pp. 79-91.• Shiller, Robert J., Irrational Exuberance, (Princeton: Princeton University Press, 2005).• Walsh, Patrick, “The South Sea Bubble: A Parable for Our Own Times,” History Ireland, Flight. 17, no. 2 (March-April 2009), pp.. 6-7.