CONCEPT
Narrative Contagion
The IMF's 2024 formalization of Keynesian herd behavior — the empirical demonstration that <em>AI narratives spread from firm to firm</em> at speeds that produce aggregate optimism unrelated to aggregate evidence.
Narrative contagion is the contemporary formalization of what Keynes called herd behavior in speculative markets. Using natural-language processing to analyze corporate earnings calls, IMF researchers documented a specific pattern: companies tend to adopt the narratives of their peers. When one firm starts talking up the transformative power of AI, others follow suit. This contagion starts within peer-firm groups and spreads to the aggregate level, producing market-wide optimism whose intensity bears no stable relationship to evidence at the firm level. The mechanism is exactly what Keynes identified in Chapter 12 of the General Theory — animal spirits operating at scale, amplified by technology Keynes could not have imagined.
In The You On AI Field Guide
The IMF's research was published in 2024 as part of the Fund's analysis of AI's macroeconomic implications. The methodology — applying NLP to the text of earnings calls — allowed the researchers to quantify what Keynesian theorists had long argued was qualitatively true: that narratives travel, that they shape decisions, and that the
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