The Beanie Babies Effect
http://fortune.com/2015/03/11/beanie-babies-failure-lessons/
The Beanie Babies Effect
Beanie Babies, a plush toy made by Ty, Inc., were a craze in the late 1990s. Everyone had to get their hands on them. Their resale value was high because of the toys’ popularity. They were adorable and appealed to consumers back then. The craze started in Chicago and soon expanded to all over the USA.
Ty, Inc. was the first business to make a business to consumer website. This is what boosted their popularity and sales and possibly helped with their ability to get over the tipping point. The toys were consumed by consumers that liked the product and didn’t like the product. This relates to the topic of information cascade, because although some people didn’t like them, they still bought the product anyways. One reason was because everyone had them and another reason is because they wanted to resell them.
The article explains that the first sign of the crash of Beanie Babies was when the company announced that they would be retiring some set of toys. When these toys did not increase in price in the third-party market, it let people know that the hype for Beanie Babies wasn’t there anymore. Since the hype faded, so did the toys. So, apparently, they were at a stable point in high equilibrium, however, when they decided to retire their toys, they went to low equilibrium and haven’t been able to come back to the high equilibrium ever since.