Abstract: In recent years, by frequent occurrence of asset price bubble, industrialists and scholars began to focus on the bubble generation and evolution process of expansion.In this paper the existing noise traders (DSSW) model is extended by three factors, which could lead to the chance of expectation.There are overconfidence, inflexible assets and excess liquidity.And it reveals mechanism of generation and expansion of irrational asset price bubble, which is caused by the changes of expectation on assets from the noise traders.The results are as follows: the three factors prompt the chances of asset price expectations, leading to the formation and expansion of irrational asset price bubble.Then, simulation test is made on the expansion process of irrational asset price bubble with MATLAB.The results are as follows: the larger the ratio of noise traders, non-informed noise traders, overconfidence factors, inflexible asset factors and the excess liquidity factors are, the faster and greater the irrational asset price bubbles expansion and deviation will be.This will provide certain reference value to avoid the over-rapid and oversize bubble expansion.

Key words: expectation, noise traders model (DSSW), asset price bubble generation, asset price bubble expansion