When people follow others’ lead rather than relying on their own knowledge or making their own decisions, this influence is obvious. Herding theory has a long history in crowd psychology and philosophy. It has been discussed in relation to the collective irrationality of investors, including stock market bubbles, making it particularly pertinent in the field of finance. Herd behavior is frequently referred to as “information cascades” in different contexts of decision-making, such as politics, science, and popular culture. Numerous elements, such as fear, uncertainty, or a common identity among decision-makers, might amplify herding behavior.
Menu