Behavioural Economics: “Herd Behavior”
Understanding the Herd Instinct in Modern Economics. Trace the evolution of herd behavior from its origins in 19th-century philosophy to its critical role in contemporary psychology and finance. This comprehensive literature review isolates the mechanics of simultaneous group behavior, offering an in-depth look at how the "crowd" heavily influences behavioral economics today.
Description
Herd behavior is a well-known concept with deep philosophical roots. Søren Kierkegaard and Friedrich Nietzsche were among the first to condemn what they termed "the crowd," "herd morality," and the "herd instinct" in human civilization. Today, contemporary psychology and economic studies use the concept of herd behavior to explain the phenomenon of many individuals simultaneously responding in the exact same way. The term itself was popularized by British physician Wilfred Trotter in his 1914 book, Instincts of the Herd in Peace and War. Since then, scholars have applied this concept across various fields—including finance and marketing—to study individual decision-making. This research centers on a comprehensive literature review of herd behavior, specifically exploring its massive impact and application within the field of behavioral economics.