The tulipmania: Fact or artifact?

Earl Thompson ()

Public Choice, 2007, vol. 130, issue 1, 99-114

Abstract: The famous tulipmania, which saw the reported prices of several breeds of tulip bulbs rise to above the value of a furnished luxury house in 17th century Amsterdam, was an artifact created by an implicit conversion of ordinary futures contracts into option contracts in an imperfectly successful attempt by Dutch futures buyers and public officials to bail themselves out of previously incurred speculative losses in the impressively price-efficient, fundamentally driven, market for Dutch tulip contracts. There was thus nothing maniacal about prices in this period. Despite outward appearances, the tulipmania was not a bubble because bubbles require the existence of mutually-agreed-upon prices that exceed fundamental values. The “tulipmania” was simply a period during which the prices in futures contracts had been legally, albeit temporarily, converted into options exercise prices. Copyright Springer Science + Business Media B.V. 2007

Keywords: Public officials; Legislatures; Instability; Herd effects; Tulipmania; Holland; 17th century; Futures contracts; Options contracts; Thirty Years War; Black-Scholes; Breeders markets; Equilibrium price paths (search for similar items in EconPapers)
Date: 2007
References: View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://hdl.handle.net/10.1007/s11127-006-9074-4 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:pubcho:v:130:y:2007:i:1:p:99-114

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11127/PS2

DOI: 10.1007/s11127-006-9074-4

Access Statistics for this article

Public Choice is currently edited by WIlliam F. Shughart II

More articles in Public Choice from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().