Ideas related to herd behavior have been around for many years. They have received attention from notable 19th-century Western philosophers who derided the herd as the antithesis of individuality. Søren Kierkegaard, the famous Danish philosopher, celebrated the individual over “the crowd,” while similar ideas also derived great attention from Friedrich Nietzsche,2 who once remarked that, “the concept of greatness entails being noble, wanting to be by oneself, being able to be different, standing alone and having to live independently.”
The foundation of these notions likely go back much earlier than Kierkegaard and Nietzsche, to ancient musings on the nature of the individual, and are consistent with the intellectual ideals in the West that champion individuality. Aside from philosophy, interest in group behavior in psychology can also be found in the 19th century. In 1895, Gustave Le Bon, a French polymath, published The Crowd: A Study of the Popular Mind which focused on the crowds on the French Revolution. Le Bon’s text would influence Sigmund Freud’s own theories on crowd psychology,3 as well as the works of Wilfred Trotter, who in 1914 published Instincts of the Herd in Peace and War, which became a classic in the realm of social psychology and has been credited with popularizing the term “herd behavior.”
As the field of psychology evolved, so did evidence and support for conforming to certain behaviors. While the Freudian approach to psychology went out of fashion, experimental studies filled the void in psychological inquiry. One of these studies came from Solomon Asch in 1951, illustrating the effects of conformity on human decision-making,4 and continues to be taught in introductory psychology courses across the world. In the experiment, Asch had groups of eight participants assess the length of three lines in relation to a target line. One of the lines was identical to the target line, while the other two were unambiguously longer or shorter. Of the groups of eight participants, however, seven were in on the experiment. Asch had them pretend to think that one of the longer or shorter lines was the same length as the target. The purpose of the study was to determine whether the “real” participants would change their correct answer to conform to the group’s incorrect answer. Incredibly, roughly 37% of responses conformed to the incorrect group response, despite the error rate being less than 1% when people were asked to assess the lines on their own.
Asch’s finding is quite remarkable when you look at the lines and see just how obvious the correct answer is. The error in the result is apparent, and it highlights the irrationality of group decision-making. This fallibility in conformity has given rise to familiar concepts such as groupthink and the bandwagon effect; such attention to these real-world behaviors that lead to erroneous decisions has made the concept of herding ripe for the field of behavioral economics, which was largely built upon efforts to empirically support evidence of human irrationality. The interest in herding behavior within behavioral economics has resulted in considerable research on herding within financial markets and has created a strong conceptual link between herding and economic decision-making.