Group-think caused the market to fail

EOI board member Stan Sorscher takes a an insightful look at a new form of market failure: “group-think”:

Markets are powerful and efficient. Markets fail.

Engineers study failure. When we design a structure or a system, it is our professional obligation to account for known failure mechanisms, and produce a robust, practical, safe design. We don’t rely on invisible hands.

Economists will quietly and reluctantly acknowledge several conventional mechanisms for market failure.

The housing bubble and financial crisis illustrate a new mechanism, which we should add to our list of failure modes — market failure by “group-think.”

Read more on Huffington Post.

Stan Sorscher is a member of EOI’s Board of Directors. The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of the Economic Opportunity Institute.

  • Leave a Reply

Your email address will not be published. Required fields are marked *

More To Read

December 14, 2018

11 Public Policies that Will Help Washington’s Economy Work — for Everyone

The State of Working Washington 2018: Part 5

December 8, 2018

Join us for a Winter Solstice Celebration at EOI

Let's Ring in the Winter!

December 6, 2018

Higher costs are straining family budgets in Washington

The State of Working Washington 2018: Part 4