The British government's Nudge Unit, which uses insights from behavioural psychology and economics (see Nudge website for further details) to improve public policy, has been partially privatised (story here). Employees now own one third, the government owns one third, and Nesta, a charity set up to stimulate innovation, owns the other third. It seems that demand for the Nudge Unit's services from foreign governments and non-government institutions has been one of the reasons for this move. Another reason could be that this new ownership structure is applying some of the insights of behavioural economics in terms of incentivising employees of the unit. The Nudge Unit has been nudged!
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.
