Herd Behavior

Herd behavior is the tendency of individuals in a group to align their actions, beliefs or purchases with those of the larger group, often abandoning their own private information or judgment in the process. It has been studied extensively in behavioral economics and finance, where it is invoked to explain phenomena such as stock market bubbles and bank runs, in which investors imitate the actions of others rather than acting on their own independent analysis. The concept has roots in nineteenth century crowd psychology, notably Gustave Le Bon's 1895 study of crowd behavior, and in later economic models of information cascades, in which each successive individual rationally imitates those before them once enough others have already acted the same way.