Ever struggled to find a reliable babysitter? Some years ago, a group of American parents reckoned they found the solution. They created a voucher system. The rules were simple: if you babysat someone else’s kids, they give you one of their vouchers. If someone else babysat your kids, you gave them one of your vouchers. The system ensured everyone was doing their fair share of babysitting. A perennial problem of parenthood had been solved.
Or so they thought. Problems arose when some couples in the group started to hoard their vouchers, worried they might need babysitters more frequently in the future. As the flow of vouchers slowed, other couples panicked and started hoarding vouchers themselves. The result was textbook economics. The babysitting cooperative went into recession.