Why We Seek Convenient Illusions Over Reality [1]

“Opinion is the medium between knowledge and ignorance.” Plato

Shortly after the tulip bulb was introduced to Europe from the Ottoman Empire it found favor with Dutch high society. The humble tulip bulb rocketed in price. At the height of the mania one tulip bulb was equivalent to ten times the income of a skilled worker. This tulip mania or bubble which took place in the Netherlands from 1634 to 1637 is associated with a herd mentality. The overconfidence which occurred during the tulip boom was a result of individuals actively assigning weight to circumstances while ignoring evidence and fundamentals. This limitation of the human psyche contributes to overconfidence in one’s personal beliefs about some event or circumstance. This confirming bias can appear in economic and political systems as well as businesses, organizations, and social systems. This tendency to interpret information can manifest itself in economic bubbles known as speculative bubbles. Bubbles have long been influential in shaping economies and impacting societies.