“We might model the spread of a story in terms of an epidemic. Stories are like viruses. Their spread by word of mouth involves a sort of contagion. Epidemiologists have developed mathematical models of epidemics, which can be applied to the spread of stories and confidence as well. For these models the essential parameters are the infection rate (a measure of the ability of the disease to be communicated from one individual to another) and the removal rate (a measure of the speed at which people lose their contagion). The essential initial conditions are the number of people who have the disease and the number of people who are susceptible to the disease. Given these, a mathematical model of epidemics can predict the whole course of the epidemic. But there is always uncertainty, as various factors, such as mutations of the virus, can change the contagion rate over time.
Just as diseases spread through contagion, so does confidence, or lack of confidence. Indeed confidence, or the lack thereof, may be as contagious as any disease. Epidemics of confidence or epidemics of pessimism may arise mysteriously simply because there was a change in the contagion rate of certain modes of thinking.”
—Akerlof & Shiller, Animal Spirits
