It's not just financial systems that experience bubbles, reports the arXiv blog. Another recent bubble was the Human Genome Project, say Monika Gisler and her colleagues at the Swiss Federal Institute of Technology. They say that the project generated high expectations — to revolutionize medicine and change society — which got the US government to invest in the effort. That investment led to private-public competition which, they say, helped support the bubble and diminish concerns about the project's uncertainties. Most of those fears, the authors add, have come to pass, though the effort was a boon to technology development. The authors also conclude that bubbles, if managed properly, can be good. "Governments can take advantage of the social bubble mechanism to catalyze long-term investments by the private sector, which would not otherwise be supported," they say.
The Human Genome Bubble
Mar 17, 2010