The Olympic Bid Cycle as a form of irrational investing: an application of Minskyian theory

Host city bidding for the Olympic Games appears to constitute a form of pro-cyclical irrational investing that leads to multi-billion dollar economic and financial shortfalls and budget over-runs with 100% consistency. The utilisation of Minsky’s Financial Instability Hypothesis (FIH) and Credit Cyc...

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Bibliographic Details
Authors: Zehndorfer, Elesa 1975- (Author) ; Mackintosh, Chris (Author)
Format: Electronic Article
Language:English
Published: 2017
In: Cogent social sciences
Year: 2017, Volume: 3, Issue: 1
Online Access: Presumably Free Access
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Keywords:
2008 financial crisis
Corrigendum
Minsky
Minsky’s financial instability hypothesis
Olympic Games
Ponzi financing, hedge financing, speculative financing, Minsky’s Credit Cycle
Behavioural finance
Irrational investing
Description
Summary:Host city bidding for the Olympic Games appears to constitute a form of pro-cyclical irrational investing that leads to multi-billion dollar economic and financial shortfalls and budget over-runs with 100% consistency. The utilisation of Minsky’s Financial Instability Hypothesis (FIH) and Credit Cycle to the Olympic Bid Cycle sheds valuable light on the irrationality of these practices, highlighting a move from stable (hedge) to unstable (speculative) and unsustainable, precarious (ponzi) financing over the life-cycle of an Olympic bid. Application of Minskyian theory to the Olympic Bid Cycle carries important insights for practitioners and policy-makers, extends the analysis of Olympic-Games studies to the post-Classical economics realm, and addresses a wider theoretical call for the utilisation of Minskyian theory outside of a financial markets context. The article concludes with recommendations for further research.
ISSN:2331-1886
DOI:10.1080/23311886.2017.1281466