MRIs of Careful People Can Predict When Bubbles Will Pop – Facts So Romantic

r.classen via Shutterstock

In the 1630s, Holland was gripped by the world’s only known case of “tulip mania.” The intensely colored flowers were already a luxury item before then, but their prices leaped when tulips with flame patterned petals hit the market, and they continued rocketing to previously incomprehensible levels. The price for a single bulb soon far surpassed what a skilled worker could make in an entire year, and others commanded enough money to buy homes or land.

It didn’t last, of course. The inevitable and dramatic crash in prices left people puzzling over the tulip bubble for centuries to come. An early account blamed it on a group delusion, fueled by emotional highs spreading through the population like an infection. Subsequent observers found reasons in the Dutch market structure of the time, or government policies that encouraged wanton trading, or even fallout from the bubonic plague. In this more staid view, people were logically trading based on information the market presented to them. Emotions, or other vexations of human psychology, had no role in it.

Hundreds of years and many bubbles later, people are still trying to work out how the dramatic overvaluations, then stunning collapses,…
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