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Economics

Herd Behavior in Speculative Asset Bubbles

Quick fact

During the Dutch Tulip Mania of the 1630s, some single tulip bulbs sold for more than ten times the annual income of a skilled craftsman—prices driven almost entirely by herd behavior.

Why this is interesting

Have you ever wondered why otherwise rational investors keep buying an asset that they know is overpriced? The answer lies in a powerful social force that can turn a sensible market into a frenzy.