[5] This effect is often further exacerbated by herd mentality, whereby people hear stories of others who bought in early and made big profits, causing those who did not buy to feel a fear of missing out.
This effect was explained by economics professor Burton Malkiel in his book A Random Walk Down Wall Street: A bubble starts when any group of stocks, in this case those associated with the excitement of the Internet, begin to rise.
In November 2013, hedge fund manager Steven A. Cohen of SAC Capital was selling at auction artworks that he had only recently acquired through private transactions.
In reporting the sale, The New York Times noted that "Ever the trader, Mr. Cohen is also taking advantage of today’s active art market where new collectors will often pay far more for artworks than they are worth.
[17] Later in the episode, economist and fellow anchor Sloan Sabbith, in an attempt to console McAvoy about the unflattering article, explains the concept to him in an ironic light: “The greater fool is actually an economic term: it’s a patsy.
Most people spend their lives trying not to be the greater fool: we toss him the hot potato, we dive for his seat when the music stops.