‍Institutional Failure as Surprise 

A systematic historical analysis of the failure of institutions. 

Extract: 

Discerning whether an institution is near failure is a difficult epistemic problem. There are many outwardly visible pieces of institutions that do not reflect their actual health. Before the 1929 collapse of financial institutions, naive observers were optimistic on the basis of soaring stock prices. Even after the Black Tuesday stock market crash, most observers expected a normal recession and recovery. Instead, the system continued to deteriorate: bank failures wiped out savings, the gold standard was abandoned internationally, and the Great Depression ensued.

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