HIST 201: Manias, Bubbles and Market Failures from Tulips to Subprime

Instructor: D'Maris Coffman

[Summer Session II: Tuesdays and Thursdays, 1:00-4:10 p.m.]

Charles Mackay's nineteenth-century classic, Extraordinary Popular Delusions and the Madness of Crowds, has left generations of readers convinced of the irrational greed behind Tulip Mania, the South Sea Bubble, and the Mississippi Scheme. This course takes these three early-modern "bubbles" as case studies in market failure. In the first part of the course, we will investigate what, if any, market fundamentals drove investor behavior and will study the contemporary polemical literature which followed in the wake of each speculative disaster. Students will learn why modern financial and economic historians consider interpretations of these three crises pivotal to theoretical debates about rational and efficient markets. In the second half of the course, we will apply these models to three nineteenth and twentieth-century financial bubbles. Students will then develop their own research projects in which they interrogate the market realities behind a financial bubble of their choosing. Given the recent collapse of the sub-prime lending market and the earlier demise of the e-commerce boom, history, political science, sociology and finance majors should find this course especially useful.

Course requirements include regular participation in seminars (including an oral presentation), a term paper (of 10-15 pages) and a final examination.