Good Government and Animal Spirits - WSJ.com

Akerlof and Shiller on the role of beliefs in economic cycles

Good Government and Animal Spirits - WSJ.com: "entrepreneurs and companies do not just sell people what they really want. They also sell people what they think they want, and not infrequently what they think they want turns out to be snake oil. Especially in financial markets, this leads to excesses, and to bankruptcies that cause failures in the economy more generally. All of these processes are driven by stories. The stories that people tell to themselves -- about themselves, about how others behave, and even about how the economy as a whole behaves -- all influence what they do. These stories vary over time."