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Herding and Conformity

In stressful times, such as change, humans and other animals tend to herd, i.e., follow what others seem to be doing. We are, after all, first and foremost social primates. As neuroeconomist Gregory Berns puts it, “the fear of social isolation is deeply woven into the human brain. We readily discount our own perceptions for fear of being the odd one out.”24

Such behavior may confer evolutionary fitness, as speed of reaction is not limited to one’s own ability to perceive or deduce danger, but the collective intelligence of the group. If everyone is running through the jungle like crazy, it may be beneficial to run too, rather than waiting to see if there really is a lion. And, as James Surowiecki argues in The Wisdom of Crowds, the average answer of a group is often closer to the truth than virtually all of the individuals in the group.25

However, author and financial analyst Robert Prechter argues that herding, “while appropriate in some primitive life-threatening situations, is inappropriate and counterproductive to success in financial situations,” and presumably many other contexts.26 If herding always predominated over rational independent nonconformist analysis, we’d still believe that the sun revolved around the earth, which would still be flat.

Solomon Asch, the founder of social psychology, conducted a series of experiments over half a century ago, demonstrating the impact of conformity. A subject, surrounded by confederates, was asked a simple ...