off-topic: historical query concerning the Internet bubble

Andrew Odlyzko odlyzko at
Thu Aug 5 18:38:38 UTC 2010

Apologies for intruding with this question, but I can't think
of any group that might have more concrete information relevant
to my current research.

Enclosed below is an announcement of a paper on technology bubbles.
It is based largely on the Internet bubble of a decade ago, and
concentrates on the "Internet traffic doubling every 100 days" tale.
As the paper shows, this myth was perceived in very different ways
by different people, and this by itself helps undermine the foundations
of much of modern economics and economic policy making.

To get a better understanding of the dynamics of that bubble, to assist
in the preparation of a book about that incident, I am soliciting 
information from anyone who was active in telecom during that period. 
I would particularly like to know what you and your colleagues estimated 
Internet traffic growth to be, and what your reaction was to the 
O'Dell/Sidgmore/WorldCom/UUNet myth.  If you were involved in the industry,
and never heard of it, that would be extremely useful to know, too.

Ideally, I would like concrete information, backed up by dates, and possibly
even emails, and a permission to quote this information.  However, I will
settle for more informal comments, and promise confidentiality to anyone
who requests it.

Andrew Odlyzko
odlyzko at

           Bubbles, gullibility, and other challenges for economics,
              psychology, sociology, and information sciences

                             Andrew Odlyzko

                         School of Mathematics
                     and Digital Technology Center
                        University of Minnesota

                             odlyzko at

                   Preliminary version, August 5, 2010


    Gullibility is the principal cause of bubbles.  Investors and the general 
public get snared by a "beautiful illusion" and throw caution to the wind. 
Attempts to identify and control bubbles are complicated by the fact that 
the authorities who might naturally be expected to take action have often 
(especially in recent years) been among the most gullible, and were 
cheerleaders for the exuberant behavior.  Hence what is needed is an 
objective measure of gullibility.

    This paper argues that it should be possible to develop such a measure. 
Examples demonstrate, contrary to the efficient market dogma, that in some 
manias, even top-level business and technology leaders do fall prey to 
collective hallucinations and become irrational in objective terms.  During 
the Internet bubble, for example, large classes of them first became unable 
to comprehend compound interest, and then lost even the ability to do simple 
arithmetic, to the point of not being able to distinguish 2 from 10.  This 
phenomenon, together with advances in analysis of social networks and related 
areas, points to possible ways to develop objective and quantitative tools 
for measuring gullibility and other aspects of human behavior implicated in 
bubbles.  It cannot be expected to infallibly detect all destructive bubbles, 
and may trigger false alarms, but it ought to alert observers to periods 
where collective investment behavior is becoming irrational.

    The proposed gullibility index might help in developing realistic economic 
models.  It should also assist in illuminating and guiding decision making.


If you would like to be on the mailing list for notifications of future
papers on technology bubbles, please send me a note at odlyzko at

The previous three papers in this series are available at:

1.  Collective hallucinations and inefficient markets: The British Railway 
Mania of the 1840s

2.  This time is different: An example of a giant, wildly speculative, and 
successful investment mania, B.E. Journal of Economic Analysis & Policy, 
vol. 10, issue 1, 2010, article 60 (registration required)

    preprint available at:

3.  The collapse of the Railway Mania, the development of capital markets, and 
Robert Lucas Nash, a forgotten pioneer of accounting and financial analysis


Source materials for the Railway Mania and the Internet bubble are available
at the web pages


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