From Tulip Mania to Labubu Boom: How Social Proof and Herd Behavior Fuel Financial Bubbles

In recent years, the rapid growth of the Labubu collectible market has demonstrated how emotional consumption, social media influence, and scarcity-driven speculation have contributed to financial bubbles. Based on this background, this research discusses how social identity and herd behavior contribute to speculative demand in the designer toy market and compares it to the tulip mania in the 17th century. This literature review integrates empirical findings from behavioral psychology, consumer neuroscience, and social network studies, to focus on how social comparison, emotional contagion, and reward anticipation influence group decision-making. It also combines the studies about scarcity marketing and peer-driven consumption to reveal how artificial scarcity amplifies market enthusiasm. The research findings show that the consumers of Labubu generally rely on social media, such as trending topics, resale prices, and friends recommendations; in that case, herd behavior will be activated. This process is highly similar to the psychological heating up during the tulip mania. The literature reveals that: (1) social identity increases the tendency to take risks; (2) herd behavior weakens rational judgment; (3) scarcity amplifies emotional investment and speculative motives. This research ultimately concludes that the financial bubbles in the designer toy market are the result of the combined effects of social pressure, emotional contagion, and scarcity signals. It also suggests that the government should enhance consumer education, regulate platform mechanisms, and increase the transparency of the secondary market. This research provides a systematic perspective for understanding contemporary speculative consumption and offers insights for preventing financial bubbles in the contemporary market.