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Bubbles Everywhere in Human Affairs

Monika Gisler

ETH Zurich

Didier Sornette

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

May 19, 2010

Swiss Finance Institute Research Paper No. 10-16

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.

Number of Pages in PDF File: 24

Keywords: social bubbles, innovation, positive feedbacks, financial bubbles, tulip mania, Apollo program

JEL Classification: O33, O43, G12

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Date posted: May 19, 2010  

Suggested Citation

Gisler, Monika and Sornette, Didier, Bubbles Everywhere in Human Affairs (May 19, 2010). Swiss Finance Institute Research Paper No. 10-16. Available at SSRN: https://ssrn.com/abstract=1590816 or http://dx.doi.org/10.2139/ssrn.1590816

Contact Information

Monika Gisler (Contact Author)
ETH Zurich ( email )
Zürichbergstrasse 18
Zurich, 8092
Didier Sornette
Swiss Finance Institute ( email )
c/o University of Geneve
40, Bd du Pont-d'Arve
1211 Geneva, CH-6900

ETH Zürich - Department of Management, Technology, and Economics (D-MTEC) ( email )
Scheuchzerstrasse 7
Zurich, ZURICH CH-8092
41446328917 (Phone)
41446321914 (Fax)
HOME PAGE: http://www.er.ethz.ch/
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