Herd mentality rules in financial crisis (Reuters)
Herd mentality rules in financial crisis
By Maggie Fox, Health and Science Editor
WASHINGTON (Reuters) - Herd mentality rules during a financial crisis because people are wired to follow the crowd when times are uncertain, experts say.
Brain and behavior studies clearly show that when information is scarce and threats seem imminent, people often stop listening to their own logic and look to see what others are doing.
"People are afraid, and the reason they are afraid is there tremendous uncertainty right now in the markets," Gregory Berns, a neuroeconomist at Emory University in Atlanta who studies the biology of economic behavior, said in a telephone interview.
http://news.yahoo.com/s/nm/20080930/lf_ ... psychology
Neuroeconomist. Wow. That's what I want to be when I grow up.
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"The cordial quality of pear or plum
Rises as gladly in the single tree
As in the whole orchards resonant with bees."
- Emerson
Yet the most fundamental assumption in economics is that people are rational...
Following the herd in times of crisis makes sense when running away from tigers, but is not rational in finance.
Nice avatar, caramateo.
_________________
I am the steppenwolf that never learned to dance. (Sedaka)
El hombre es una bestia famélica, envidiosa e insaciable. (Francisco Tario)
I'm male by the way (yes, I know my avatar is misleading).
I don't get this. isn't herd mentality supposed to be something you don't conciously think about, like you see people running away so you start running too (I only know the theory too)?
that's what I would do if I had a spare dollar...
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not a bug - a feature.
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