Bubbling Up | ARENA

By stimulating irrational risk-taking, which results in excessive investment and experimentation, bubbles massively parallelize innovation in economic clusters that occur in time rather than space.

A bubble is therefore not simply a collective delusion but an expression of a future that is radically different from now.

As the bubble grows in scope, the contradiction becomes more visible, leading to a third common characteristic of bubbles: the bifurcation of viewpoints into totally-

positive or totally-negative

Reflexivity and hyperstition Bubbles are inherently reflexive in nature. 358 That is, they’re driven by an accelerating and self-reinforcing feedback loop between perception and reality. In social systems in general and in financial bubbles in particular, expectations influence prices. In turn, prices affect expectations. A related feature of innov

Excessive risk-taking and over-investment FOMO turbo-charges the ambition and risk tolerance of those involved, which catalyzes exuberant over-investments. Time and again, a self-reinforcing feedback loop of public and private investment results in increasing price or valuation growth in corresponding firms, sectors, or markets, which then attracts