Herding Behavior

Herding behavior refers to the tendency of individuals to follow the actions or decisions of a larger group, rather than acting independently. This phenomenon often occurs in markets, social settings, or public opinion, where people assume others have better information or make safer choices by imitating the crowd. It can lead to trends, bubbles, or collective movements that may not be based on individual analysis but rather on the desire to fit in or avoid risk. Understanding herding helps explain why groups sometimes make irrational or amplified decisions, influencing markets and societal behaviors.