Moneybox: The Hindsight Fallacy

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moneybox The Hindsight Fallacy The real reason it's so hard to predict bubbles. By Duncan Watts Posted Thursday, June 23, 2011, at 12:09 PM ET The recent sky-high IPO of LinkedIn, along with eye-popping valuations for other social networking and shopping companies, has raised concerns that we are now in the midst of another technology bubble, this one fueled by excessive investor enthusiasm for all things social. No sooner have these concerns been raised, however, than they have been countered by an array of arguments, all of which are variations on the basic claim that this internet boom is unlike the previous one. This debate illustrates one of the central causes of financial bubbles: Although after the fact it seems obvious that prices were irrational and an unhappy end was inevitable, bubbles are neither obvious nor inevitable at the time. To continue reading, click here. Duncan Watts is a principal research scientist at Yahoo Research, and author of Everything is Obvious*: Once You Know The Answer. Join the Fray: our reader discussion forum What did you think of this article? POST A MESSAGE | READ MESSAGES Also In Slate The Real Reason It's So Hard To Predict Bubbles Cars 2 Just Doesn't Have the Horsepower of the Pixar Greats Phyllis From The Office Reminisces About Her Days as an NFL Cheerleader	Advertisement
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