Boom And Bust Behavior: On The Persistence Of Strategic Decision Biases And Their Collective Outcome

Boom and bust or overshoot and collapse dynamics are common among firms in a large range of different industries. Durable consumer electronics (e.g. televisions, VCR's, calculators, etc.), telecommunications, medical equipment, chemicals, real estate, pulp and paper, agricultural commodities, natural resources, toys and games, tennis equipment, bicycles, semiconductors and running shoes, are examples of industries where boom and bust dynamics have occured (Paich & Sterman, 1993; Sterman, 2000; Sterman, Henderson, Beinhocker, & Newman, 2007). Such dynamics occur in both traditional cyclical industries (Meadows, 1970) as well as industries with pronounced product and/or category lifecycles (Klepper, 1996).