Public Choice

, Volume 130, Issue 1–2, pp 99–114

The tulipmania: Fact or artifact?

Original Article


The famous tulipmania, which saw the reported prices of several breeds of tulip bulbs rise to above the value of a furnished luxury house in 17th century Amsterdam, was an artifact created by an implicit conversion of ordinary futures contracts into option contracts in an imperfectly successful attempt by Dutch futures buyers and public officials to bail themselves out of previously incurred speculative losses in the impressively price-efficient, fundamentally driven, market for Dutch tulip contracts. There was thus nothing maniacal about prices in this period. Despite outward appearances, the tulipmania was not a bubble because bubbles require the existence of mutually-agreed-upon prices that exceed fundamental values. The “tulipmania” was simply a period during which the prices in futures contracts had been legally, albeit temporarily, converted into options exercise prices.


Public officials Legislatures Instability Herd effects Tulipmania Holland 17th century Futures contracts Options contracts Thirty Years War Black-Scholes Breeders markets Equilibrium price paths 


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Copyright information

© Springer Science + Business Media B.V. 2006

Authors and Affiliations

  1. 1.University of California at Los AngelesLos AngelesUSA

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