The term "irrational exuberance" is a popular economic concept that was first coined by former Federal Reserve Chairman Alan Greenspan in 1996. It refers to an excessive and unjustified optimism or enthusiasm about the future, often leading to speculative bubbles and financial crises.
In other words, "irrational exuberance" is a state of mind where people become overly confident and lose touch with reality, causing them to make investment decisions that are not based on sound fundamentals or rational analysis. This can lead to an inflated stock market, real estate bubble, or other financial imbalances that eventually burst, resulting in economic downturns.
The phrase has been used by economists and commentators to describe various periods of excessive optimism throughout history, including the dot-com boom of the late 1990s and the housing market bubble leading up to the 2008 financial crisis.