Bubble Emergence: Toward a Model

Abstract

In this chapter, we pull together various building blocks of Chapters 2–5 and present an overall model of bubble formation, with special focus on the contagious, irrational, and punctured bubbles of the type that have taken massive economic and social tolls in the twentieth century and that continue to threaten the economic and social well-being of people the world over in the twenty-first century. To illustrate our model of bubble formation, for example how theories behind sentiments were changed in order to justify sticky sentiments, we draw on examples from the dotcom bubble in the United Kingdom and from Nordic Europe—Iceland. To provide a stronger visualization of the model of bubble emergence, we invoke the concept of value-pricing thermometer and introduce our adapted version of the bubble thermometer. To exemplify the bubble thermometer, we explore social processes that attempt to build up movie hype, and their aftermath, and relate such exploration to our emerging interdisciplinary theory of bubbles.