Tuesday, 21 May 2019 | 03:37 WIB

Deconstructing Human Irrationality through Behavioral Economics

Professor Richard H. Thaler (wikimedia)

Error Thinking # 4: Herd Behavior

Studies in behavioral economics find this dark fact: humans, me and all of you, actually like to act like a flock of ducks. One turns to the left, they all turn to the left. One turns to the right, they all turn to the right.

We all like to be talkative. We have behavior that likes to mimic the crowd and people around us.

This herd behavior gives rise to mania, a momentary trend or uproar over something. The crowd grows noisier.

Busy roadside food stalls, will be more crowded. Stores and hawkers with long queues will certainly attract more visitors.

Books that are labeled best sellers will definitely increase sales. The more attractive the investments, the more people that interested will come.

These are all herd behavior phenomena. Because you and I really like talkative and curious about what many people like.