Policy bubbles: What factors drive their birth, maturity and death?

A policy bubble is a policy overreaction that is reinforced by positive feedback over a relatively long period of time. Policy bubbles impose social costs without producing offsetting benefits. Moshe Maor explores this phenomenon and explains how it may mature as a result of over-optimism and overconfidence among policymakers and the general public, or as a result of human herding and emotional contagion.