Herd mentality
Encyclopedia
Herd mentality describes how people are influenced by their peers to adopt certain behaviors, follow trends, and/or purchase items. Examples of the herd mentality include stock market
trends, fashions in apparel, cars, taste in music, home décor, etc. Social psychologists study the related topics of group intelligence
, crowd wisdom, and decentralized decision making
.
, meaning "group of animals," and mentality, implying a certain frame of mind. However the most succinct definition would be: "how large numbers of people act in the same ways at the same times."
Herd behavior
is distinguished from herd mentality because it applies to all animals, whereas the term mentality implies a uniquely human phenomenon. Herd mentality implies a fear-based reaction to peer pressure which makes individuals act in order to avoid feeling "left behind" from the group. Herd mentality is also sometimes known as "mob mentality."
have been prevalent descriptors for human behavior since people began to form tribes, migrate in groups, and perform cooperative marketing and agricultural functions. The idea of a "group mind
" or "mob behavior" was first put forward by 19th-century French social psychologists Gabriel Tarde
and Gustave Le Bon
. Herd behavior in human societies has also been studied by Sigmund Freud
and Wilfred Trotter
, whose book Herd Instincts in Peace and War is a classic in the field of social psychology. Sociologist and Economist Thorstein Veblen
's Theory of the Leisure Class illustrates how individuals imitate other group members of higher social status in their consumer behavior. More recently, Malcolm Gladwell
in The Tipping Point
, examines how cultural, social, and economic factors converge to create trends in consumer behavior. In 2004, the New Yorker
financial columnist James Suroweicki published The Wisdom of Crowds.
21st-century academic fields such as marketing and behavioral finance attempt to identify and predict the rational and irrational behavior of investors. (See the work of Daniel Kahneman
, Robert Shiller
, Vernon L. Smith
, and Amos Tversky
.) Driven by emotional reactions such as greed and fear
, investors can be seen to join in frantic purchasing and sales of stocks, creating bubbles
and crashes
.
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
trends, fashions in apparel, cars, taste in music, home décor, etc. Social psychologists study the related topics of group intelligence
Group intelligence
Group intelligence refers to a process by which large numbers of people simultaneously converge upon the same point of knowledge.Social psychologists study group intelligence and related topics such as decentralized decision making and group wisdom, using demographic information to study the...
, crowd wisdom, and decentralized decision making
Decentralized decision making
Decentralized decision making is any process where the decision making authority is distributed throughout a larger group. It also connotes a higher authority given to lower level functionaries, executives, and workers. This can be in any organization of any size, from a governmental authority to a...
.
Definition
The term herd mentality is the word herdHerd
Herd refers to a social grouping of certain animals of the same species, either wild or domestic, and also to the form of collective animal behavior associated with this or as a verb, to herd, to its control by another species such as humans or dogs.The term herd is generally applied to mammals,...
, meaning "group of animals," and mentality, implying a certain frame of mind. However the most succinct definition would be: "how large numbers of people act in the same ways at the same times."
Herd behavior
Herd behavior
Herd behavior describes how individuals in a group can act together without planned direction. The term pertains to the behavior of animals in herds, flocks and schools, and to human conduct during activities such as stock market bubbles and crashes, street demonstrations, sporting events,...
is distinguished from herd mentality because it applies to all animals, whereas the term mentality implies a uniquely human phenomenon. Herd mentality implies a fear-based reaction to peer pressure which makes individuals act in order to avoid feeling "left behind" from the group. Herd mentality is also sometimes known as "mob mentality."
History
Herd mentality and herd behaviorHerd behavior
Herd behavior describes how individuals in a group can act together without planned direction. The term pertains to the behavior of animals in herds, flocks and schools, and to human conduct during activities such as stock market bubbles and crashes, street demonstrations, sporting events,...
have been prevalent descriptors for human behavior since people began to form tribes, migrate in groups, and perform cooperative marketing and agricultural functions. The idea of a "group mind
Collective intelligence
Collective intelligence is a shared or group intelligence that emerges from the collaboration and competition of many individuals and appears in consensus decision making in bacteria, animals, humans and computer networks....
" or "mob behavior" was first put forward by 19th-century French social psychologists Gabriel Tarde
Gabriel Tarde
Jean-Gabriel De Tarde or Gabriel Tarde in short French sociologist, criminologist and social psychologist who conceived sociology as based on small psychological interactions among individuals , the fundamental forces being imitation and innovation.- Theory :Among the concepts...
and Gustave Le Bon
Gustave Le Bon
Gustave Le Bon was a French social psychologist, sociologist, and amateur physicist...
. Herd behavior in human societies has also been studied by Sigmund Freud
Sigmund Freud
Sigmund Freud , born Sigismund Schlomo Freud , was an Austrian neurologist who founded the discipline of psychoanalysis...
and Wilfred Trotter
Wilfred Trotter
Wilfred Batten Lewis Trotter, FRS was a British surgeon, a pioneer in neurosurgery. He was also known for his studies on social psychology, most notably for his concept of the herd instinct, which he first outlined in two published papers in 1908, and later in his famous popular work Instincts of...
, whose book Herd Instincts in Peace and War is a classic in the field of social psychology. Sociologist and Economist Thorstein Veblen
Thorstein Veblen
Thorstein Bunde Veblen, born Torsten Bunde Veblen was an American economist and sociologist, and a leader of the so-called institutional economics movement...
's Theory of the Leisure Class illustrates how individuals imitate other group members of higher social status in their consumer behavior. More recently, Malcolm Gladwell
Malcolm Gladwell
Malcolm Gladwell, CM is a Canadian journalist, bestselling author, and speaker. He is currently based in New York City and has been a staff writer for The New Yorker since 1996...
in The Tipping Point
The Tipping Point
The Tipping Point: How Little Things Can Make a Big Difference is a book by Malcolm Gladwell, first published by Little Brown in 2000....
, examines how cultural, social, and economic factors converge to create trends in consumer behavior. In 2004, the New Yorker
The New Yorker
The New Yorker is an American magazine of reportage, commentary, criticism, essays, fiction, satire, cartoons and poetry published by Condé Nast...
financial columnist James Suroweicki published The Wisdom of Crowds.
21st-century academic fields such as marketing and behavioral finance attempt to identify and predict the rational and irrational behavior of investors. (See the work of Daniel Kahneman
Daniel Kahneman
Daniel Kahneman is an Israeli-American psychologist and Nobel laureate. He is notable for his work on the psychology of judgment and decision-making, behavioral economics and hedonic psychology....
, Robert Shiller
Robert Shiller
Robert James "Bob" Shiller is an American economist, academic, and best-selling author. He currently serves as the Arthur M. Okun Professor of Economics at Yale University and is a Fellow at the Yale International Center for Finance, Yale School of Management...
, Vernon L. Smith
Vernon L. Smith
Vernon Lomax Smith is professor of economics at Chapman University's Argyros School of Business and Economics and School of Law in Orange, California, a research scholar at George Mason University Interdisciplinary Center for Economic Science, and a Fellow of the Mercatus Center, all in Arlington,...
, and Amos Tversky
Amos Tversky
Amos Nathan Tversky, was a cognitive and mathematical psychologist, a pioneer of cognitive science, a longtime collaborator of Daniel Kahneman, and a key figure in the discovery of systematic human cognitive bias and handling of risk. Much of his early work concerned the foundations of measurement...
.) Driven by emotional reactions such as greed and fear
Greed and fear
Greed and fear are supposed, together with herd instinct, to be the three main emotional motivators of stock markets and business behavior, and one of the cause of bull markets, bear markets and business cycles.- From a market saying to an academic research topic :...
, investors can be seen to join in frantic purchasing and sales of stocks, creating bubbles
Economic bubble
An economic bubble is "trade in high volumes at prices that are considerably at variance with intrinsic values"...
and crashes
Stock market crash
A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic as much as by underlying economic factors...
.
Further reading
- Bloom, Howard, The Global Brain: The Evolution of Mass Mind from the Big Bang to the 21st Century. (2000) John Wiley & Sons, New York.
- Freud, Sigmund's Massenpsychologie und Ich-Analyse (1921; English translation Group Psychology and the Analysis of the Ego, *1922). Reprinted 1959 Liveright, New York.
- Gladwell, Malcolm, The Tipping Point: How Little Things Can Make a Big Difference. (2002) Little, Brown & Co., Boston.
- Le Bon, Gustav, Les Lois psychologiques de l'évolution des peuples. (1894) National Library of France, Paris.
- Le Bon, Gustave, The Crowd: A Study of the Popular Mind. (1895) Project Gutenberg.
- Trotter, Wilfred, Instincts of the Herd in Peace and War. (1915) Macmillan, New York.
- Suroweicki, James: The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, *Societies and Nations. (2004) Little, Brown, Boston.
- Sunstein, Cass, Infotopia: How Many Minds Produce Knowledge. (2006) Oxford University Press, Oxford, United Kingdom.
External links
- http://www.biz.uiowa.edu/iem/
- http://www.npr.org/templates/story/story.php?storyId=3806781
- http://www.randomhouse.com/features/wisdomofcrowds/excerpt.html