In the fall of 1930, the U.S. economy was on a path to recovery following a contraction that occurred the year before. However, worries about the state of the economy, and the banking system in particular, prompted an increasing number of bank customers to attempt to withdraw their funds, an event known as a bank run. Because banks normally keep only a small proportion of deposits in cash, bank runs create a self-fulfilling prophecy such that initial concerns about banks’ possible insolvency ultimately cause insolvency. The bank run of 1930 resulted in the worst economic downturn in the modern history, the Great Depression.
Research: We’re Less Likely to Collaborate in Bad Economic Times
Zero-sum thinking is more common during recessions.
January 04, 2018
Summary.
A series of studies investigated how employees’ perceptions of the economy affect how they work with one another. Most employees will experience five to 10 recessionary periods in the course of their professional lives. And, according to the research, employees react to news of an economic downturn in ways that hinder rather than help their organizations’ ability to weather adverse economic times. Because bad economic news makes employees more likely to view the economy as zero-sum, it makes them less likely to help others. And that, in turn, might make their organization less likely to survive the recession.