Bubbles Everywhere in Human Affairs

Monika Gisler and Didier Sornette
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Monika Gisler: ETH Zurich
Didier Sornette: ETH Zurich and Swiss Finance Institute

No 10-16, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We review the “social bubble” hypothesis, which holds that strong social interactions between enthusiastic supporters of new ventures weave a network of reinforcing feedbacks that lead to a widespread endorsement and extraordinary commitment by those involved in the projects, beyond what would be rationalized by a standard cost-benefit analysis in the presence of extraordinary uncertainties and risks. Starting with analyses of previous bubbles, in particular the famous “Tulip mania”, the social bubble hypothesis is illustrated by the example of the Apollo project. The social bubble hypothesis suggests novel mechanisms to catalyze longterm investments, innovations and risk-taking by the private sector, which otherwise would not be supported.

Keywords: social bubbles; innovation; positive feedbacks; financial bubbles, tulip mania, Apollo program (search for similar items in EconPapers)
JEL-codes: G12 O33 O43 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2010-05
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp1016

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