This Is Why Tech Bubbles Actually Happen


We tap our phone, we expect to be able to make a call, send a text or open an app. We key in our PIN at an ATM, we expect to get cash. We punch in a time on the office microwave, we expect our lunch to heat up. In short, when we depend on technology for countless everyday tasks, we take for granted that it’s going to work.

A new study finds that this automatic assumption has a surprising, far-reaching dark side. Much as we expect the technology we interact with every day to be successful, we expect stocks of publicly traded technology companies to be successful — even if there isn’t any evidence that they perform any better than old-economy stalwarts.

We unconsciously confer on technology, especially new technology that we don’t really understand, an almost magical status. “We found that people weren’t particularly excited about the prospects of old technology,” says Christopher Robert, associate professor of management at the University of Missouri — Columbia and one of the paper’s authors. “You’re more likely to have faith that something you don’t really understand will work.
That’s because “technology” gets lumped together as this sort of monolithic entity, Robert explains. “We develop [a mental] shortcut that all of these technologies are successful and they work and then overgeneralize that perception to all technology,” he says. “We often don’t see its failures,” he points out, because those either never make it to market or fail to become a part of our daily lives.