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What is herd behavior?

Updated: 9/23/2023
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11y ago

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The concept of herd behavior is that a group acts differently from the sum of the individuals in the herd.

Herds have special movement characteristics: In nature, each individual in a herd (or a school of fish) tends to move toward the middle of the group. When one member of a herd spooks or moves sharply others nearby move similarly, thus the center can shift quickly with every herd member following suit. Members will not move away from the center of the herd, which has the effect of keeping the herd together.

People exhibit analogous behavior. When a big stock sale is made it may trigger a small dip in the stock price. This is noticed and others sell as a reaction. This further triggers selling in others in a reactionary way. It can become a stampede. A new product may attract early adapters and then "goes viral" - a classic herd effect.


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