Not local economy, but a great (actually interesting as it isn’t about the Tulip Mania) explanation of economic bubbles.
PS. I have boxes of Beanie Babies that I’ll never give up AND I have 2,000 Beanie Baby collector cards- those were a gift.
Andrew Odlyzko, a mathematician and bubble expert, proposes a simpler theory explaining speculative panics in his study on the British Railway Mania of the 1840s. Odlyzko credits Railway Mania in part to a “collective hallucination,” an extreme form of groupthink wherein a significant chunk of society feverishly buys into a shared dream with no regard for the skeptics and naysayers. (Some scholars think Jesus’ resurrection might have been an acute instance of collective hallucination.)
The existence of groupthink has been confirmed in a rich assortment of studies, and Odlyzko’s theory expands the idea to economic bubbles. Under his analysis, the initial coterie of Beanie Baby collectors comprised an in-group that shared the great secret of Beanie Babies’ worth. As more people discovered the toy, they yearned to learn this secret and partake in the impending financial success of the Beanie Babies market. Soon, millions of Americans were gripped by…
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