Post by Lukas Bänninger Leone

From Self-Fulfilling to Self-Destructing Prophecy A concept that I find interesting in an economic context is the self-fulfilling prophecy. When many - or apparently important - people claim that the price of gold (or whatever) is going up, it actually goes up (more than it would if they would have said nothing). In the context of Corona, it gets particularly exciting: When the rumor arises that toilet paper is running out, people shop like crazy, even though most of them know that it’s just a rumor. But the commodity is actually becoming scarce. However, an inverse effect could arise concerning forecasts for the further course of the pandemic: if the forecasts are particularly gloomy (and are spread in the media), the case numbers could actually decline because more people will again behave more anxiously and obey the rules. If the prognoses are good, the opposite can happen. These prophecies destroy themselves, so to speak.