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Your email address will not be published.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

March 24, 2023

Victory! Washington Takes a Critical Step Towards Balancing our Tax Code

Washington state supreme court upholds the capital gains tax

February 15, 2023

Podcast: Getting to Lower Health Care Costs in Washington

EOI's Sam Hatzenbeler joins Washington's Indivisible Podcast to discuss our state's health care costs crisis and what the legislature can do to solve it

February 10, 2023

Thirty years of FMLA, how many more till we pass paid leave for all?

The U.S. is overdue for a federal paid leave policy