Diversity Rules in Nature and Maybe in Markets, Too

Diversity safeguards populations from defective genes, stabilizes nature’s ecosystems and fosters innovation in business.

Now, research suggests that it may protect financial markets from manic excess, Bloomberg Markets magazine will report in its February issue. Bubbles form when traders trust others’ judgment without scrutiny, and that happens more in ethnically homogeneous markets, according to a new paper in the Proceedings of the National Academy of Sciences by a team of academics led by Sheen S. Levine and David Stark of Columbia University.