Bubbles: towards a typology

Abstract

Purpose

Bubbles – technology, stock market, housing, and more – have punctuated modern economic history with some regularity, and seem to be happening with greater frequency in recent periods. Part of the authors' larger work on a meta‐theory of bubbles, this paper aims to compare and contrast bubbles in the fields of entertainment, technology, commodities, housing, and stock markets. It seeks to offer a typology of bubbles.

Design/methodology/approach

Using the literature on bubbles and related socioeconomic phenomena, and experience‐based insights, the paper compares and contrasts bubbles in different fields, to derive inductively a typology of bubbles.

Findings

The paper finds six main types of bubbles, ranging from relatively harmless transient and playful bubbles for some movies at one end, to socially dangerous, contagious, irrational and punctured bubbles at the other end, for stock markets or real estate.

Practical implications

Understanding the dimensions that lead to bubbles can provide policymakers with some early intervention tools – to prevent dangerous bubbles.

Social implications

The insights into dimensions and processes of bubble formation presented provide society with a way to judge actors (businesses, public policymakers) and institutions in terms of their roles in creating or managing bubbles.

Originality/value

The main contribution here is the development of two sets of dimensions – the immediate asset‐linked dimensions and somewhat removed but even more powerful meta‐dimensions – that contribute to the formation or collapse of bubbles.

Citation

Dholakia, N. and Turcan, R.V. (2013), "Bubbles: towards a typology", Foresight, Vol. 15 No. 2, pp. 79-88. https://doi.org/10.1108/14636681311321095