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Exuberant Innovation: The Human Genome Project

25 Pages Posted: 18 Mar 2010  

Monika Gisler

ETH Zurich

Didier Sornette

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Swiss Finance Institute

Ryan Woodard

ETH Zurich

Abstract

We present a detailed synthesis of the development of the Human Genome Project (HGP) from 1986 to 2003 in order to test the “social bubble” hypothesis that strong social interactions between enthusiastic supporters of the HGP weaved a network of reinforcing feedbacks that led to a widespread endorsement and extraordinary commitment by those involved in the project, beyond what would be rationalized by a standard cost-benefit analysis in the presence of extraordinary uncertainties and risks. The vigorous competition and race between the initially public project and several private initiatives is argued to support the social bubble hypothesis. We also present quantitative analyses of the concomitant financial bubble concentrated on the biotech sector. Confirmation of this hypothesis is offered by the present consensus that it will take decades to exploit the fruits of the HGP, via a slow and arduous process aiming at disentangling the extraordinary complexity of the human complex body. The HGP has ushered other initiatives, based on the recognition that there is much that genomics cannot do, and that “the future belongs to proteomics”. We present evidence that the competition between the public and private sector actually played in favor of the former, since its financial burden as well as its horizon was significantly reduced (for a long time against its will) by the active role of the later. This suggests that governments can take advantage of the social bubble mechanism to catalyze long-term investments by the private sector, which would not otherwise be supported.

Keywords: Human Genome Project; social bubbles; innovation; positive feedbacks; financial bubbles;

JEL Classification: O33, 043, G12

Suggested Citation

Gisler, Monika and Sornette, Didier and Woodard, Ryan, Exuberant Innovation: The Human Genome Project. Swiss Finance Institute Research Paper No. 10-12. Available at SSRN: https://ssrn.com/abstract=1573682 or http://dx.doi.org/10.2139/ssrn.1573682

Monika Gisler

ETH Zurich ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland

Didier Sornette (Contact Author)

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC) ( email )

Scheuchzerstrasse 7
Zurich, ZURICH CH-8092
Switzerland
41446328917 (Phone)
41446321914 (Fax)

HOME PAGE: http://www.er.ethz.ch/

Swiss Finance Institute ( email )

c/o University of Geneve
40, Bd du Pont-d'Arve
1211 Geneva, CH-6900
Switzerland

Ryan Woodard

ETH Zurich ( email )

Department of Management, Technology and Economics
Kreuzplatz 5
8032 Zurich, CH-1015
Switzerland
+41 44 632 83 79 (Phone)
+41 44 632 19 14 (Fax)

HOME PAGE: http://www.er.ethz.ch/

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