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

    Zehndorfer, E and Mackintosh, CI (2017) The Olympic Bid Cycle as a form of irrational investing: an application of Minskyian theory. Cogent Social Sciences: Sport, Leisure & Tourism, 3 (1). p. 1281466. ISSN 2331-1886

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    Abstract

    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.

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