Compressed decision time makes financial markets prone to cascading collapse
Evidence
The difference this time is that there is not even time to agonize. And the problems are not confined to the realms of political and military decision-making, for the world’s financial markets are on the boil in ways that make a snap judgement here, an unconsidered word there, and a gut reaction somewhere else the slip that can unravel the whole skein of fictitious capital formation and of interdependency. — David Harvey, The Condition of Postmodernity, 1938
Categorization
- QUESTION: Would be worth tracing whether Harvey’s 1989 account of snap-judgment-driven market unraveling can be read as predicting later flash-crash dynamics.
- XREF: connects to: Packing risky mortgages into opaque derivatives under weak regulation enabled the financial crisis — Albert Bandura, Moral Disengagement: How People Do Harm…, 1492; Portfolio insurance designed to limit losses can amplify market volatility. — Shapiro, Susan P., The Social Control of Impersonal Trust, 144; Expected cheating risk can collapse markets entirely under asymmetric information. — Diego Gambetta, Trust - Making and Breaking Cooperative…, 2229 (+12 more)
Broader Connections
- Packing risky mortgages into opaque derivatives under weak regulation enabled the financial crisis
#exemplifies(0.85) — Albert Bandura, Moral Disengagement, 1492 - Portfolio insurance designed to limit losses can amplify market volatility.
#exemplifies(0.80) — Shapiro, Susan P., The Social Control of Impersonal Trust, 144 - Expected cheating risk can collapse markets entirely under asymmetric information.
#expands(0.80) — Diego Gambetta, Trust - Making and Breaking Cooperative…, 2229