Herd behavior

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Herd behavior describes how individuals in a group can act collectively without centralized direction. The term can refer to the behavior of animals in herds, packs, bird flocks, fish schools and so on, as well as the behavior of humans in demonstrations, riots and general strikes,[1] sporting events, religious gatherings, episodes of mob violence and everyday decision-making, judgement and opinion-forming.

Raafat, Chater and Frith proposed an integrated approach to herding, describing two key issues, the mechanisms of transmission of thoughts or behavior between individuals and the patterns of connections between them.[2] They suggested that bringing together diverse theoretical approaches of herding behavior illuminates the applicability of the concept to many domains, ranging from cognitive neuroscience to economics.[3]

In animals[edit]

A group of animals fleeing from a predator shows the nature of herd behavior. In 1971, in the oft cited article "Geometry For The Selfish Herd," evolutionary biologist W. D. Hamilton asserted that each individual group member reduces the danger to itself by moving as close as possible to the center of the fleeing group. Thus the herd appears as a unit in moving together, but its function emerges from the uncoordinated behavior of self-serving individuals.[4]


Asymmetric aggregation of animals under panic conditions has been observed in many species, including humans, mice, and ants.[5] Theoretical models have demonstrated symmetry-breaking similar to observations in empirical studies. For example, when panicked individuals are confined to a room with two equal and equidistant exits, a majority will favor one exit while the minority will favor the other.

Possible mechanisms for this behavior include Hamilton’s selfish herd theory, neighbor copying, or the byproduct of communication by social animals or runaway positive feedback.

Characteristics of escape panic include:

  • Individuals attempt to move faster than normal.
  • Interactions between individuals become physical.
  • Exits become arched and clogged.
  • Escape is slowed by fallen individuals serving as obstacles.
  • Individuals display a tendency towards mass or copied behavior.
  • Alternative or less used exits are overlooked.[4][6]

In human societies[edit]

The philosophers Søren Kierkegaard and Friedrich Nietzsche were among the first to criticize what they referred to as "the crowd" (Kierkegaard) and "herd morality" and the "herd instinct" (Nietzsche) in human society. Modern psychological and economic research has identified herd behavior in humans to explain the phenomena of large numbers of people acting in the same way at the same time. The British surgeon Wilfred Trotter popularized the "herd behavior" phrase in his book, Instincts of the Herd in Peace and War (1914). In The Theory of the Leisure Class, Thorstein Veblen explained economic behavior in terms of social influences such as "emulation," where some members of a group mimic other members of higher status. In "The Metropolis and Mental Life" (1903), early sociologist George Simmel referred to the "impulse to sociability in man", and sought to describe "the forms of association by which a mere sum of separate individuals are made into a 'society' ". Other social scientists explored behaviors related to herding, such as Freud (crowd psychology), Carl Jung (collective unconscious), and Gustave Le Bon (the popular mind). Swarm theory observed in non-human societies is a related concept and is being explored as it occurs in human society.

Stock market bubbles[edit]

Large stock market trends often begin and end with periods of frenzied buying (bubbles) or selling (crashes). Many observers cite these episodes as clear examples of herding behavior that is irrational and driven by emotion—greed in the bubbles, fear in the crashes. Individual investors join the crowd of others in a rush to get in or out of the market.[7]

Some followers of the technical analysis school of investing see the herding behavior of investors as an example of extreme market sentiment.[8] The academic study of behavioral finance has identified herding in the collective irrationality of investors, particularly the work of Nobel laureates Vernon L. Smith, Amos Tversky, Daniel Kahneman, and Robert Shiller.[9][a]

Hey and Morone (2004) analyzed a model of herd behavior in a market context. Their work is related to at least two important strands of literature. The first of these strands is that on herd behavior in a non-market context. The seminal references are Banerjee (1992) and Bikhchandani, Hirshleifer and Welch (1992), both of which showed that herd behavior may result from private information not publicly shared. More specifically, both of these papers showed that individuals, acting sequentially on the basis of private information and public knowledge about the behavior of others, may end up choosing the socially undesirable option. The second of the strands of literature motivating this paper is that of information aggregation in market contexts. A very early reference is the classic paper by Grossman and Stiglitz (1976) that showed that uninformed traders in a market context can become informed through the price in such a way that private information is aggregated correctly and efficiently. In this strand of the literature, the most commonly used empirical methodologies to test for herding toward the average, are the works of Christie and Huang (1995) and Chang, Cheng and Khorana (2000). Overall, it was shown that it is possible to observe herd-type behavior in a market context. The results refer to a market with a well-defined fundamental value. Even if herd behavior might only be observed rarely, this has important consequences for a whole range of real markets – most particularly foreign exchange markets.

One such herdish incident was the price volatility that surrounded the 2007 Uranium bubble, which started with flooding of the Cigar Lake Mine in Saskatchewan, during the year 2006.[10][11][12]

In crowds[edit]

Main article: Crowd psychology

Crowds that gather on behalf of a grievance can involve herding behavior that turns violent, particularly when confronted by an opposing ethnic or racial group. The Los Angeles riots of 1992, New York Draft Riots and Tulsa Race Riot are notorious in U.S. history. The idea of a "group mind" or "mob behavior" was put forward by the French social psychologists Gabriel Tarde and Gustave Le Bon.

Everyday decision-making[edit]

"Benign" herding behaviors may occur frequently in everyday decisions based on learning from the information of others, as when a person on the street decides which of two restaurants to dine in. Suppose that both look appealing, but both are empty because it is early evening; so at random, this person chooses restaurant A. Soon a couple walks down the same street in search of a place to eat. They see that restaurant A has customers while B is empty, and choose A on the assumption that having customers makes it the better choice. Because other passersby do the same thing into the evening, restaurant A does more business that night than B. This phenomenon is also referred as an information cascade.[13][14][15][16]

See also[edit]


a. ^ See for example the Wikipedia article on his book Irrational Exuberance.[9]


  1. ^ Braha, D (2012) Global Civil Unrest: Contagion, Self-Organization, and Prediction. PLoS ONE 7(10): e48596, article doi:10.1371/journal.pone.0048596
  2. ^ Raafat, R. M.; Chater, N.; Frith, C. (2009). "Herding in humans". Trends in Cognitive Sciences 13 (10): 420–428. doi:10.1016/j.tics.2009.08.002. 
  3. ^ Burke, C. J.; Tobler, P. N.; Schultz, W.; Baddeley, M. (2010). "Striatal BOLD response reflects the impact of herd information on financial decisions". Frontiers in Human Neuroscience 4: 48. doi:10.3389/fnhum.2010.00048. PMID 20589242. 
  4. ^ a b Hamilton, W. D. (1971). "Geometry for the Selfish Herd". Journal of Theoretical Biology 31 (2): 295–311. doi:10.1016/0022-5193(71)90189-5. PMID 5104951. 
  5. ^ Altshuler, E.; Ramos, O.; Nuñez, Y.; Fernández, J. "Panic-induced symmetry breaking in escaping ants" (PDF). University of Havana, Havana, Cuba. Retrieved 2011-05-18. 
  6. ^ Altshuler, E.; Ramos, O.; Núñez, Y.; Fernández, J.; Batista-Leyva, A. J.; Noda, C. (2005). "Symmetry Breaking in Escaping Ants". The American Naturalist 166 (6): 643–649. doi:10.1086/498139. 
  7. ^ Markus K. Brunnermeier, Asset Pricing under Asymmetric Information: Bubbles, Crashes, Technical Analysis, and Herding, Oxford University Press (2001).
  8. ^ Robert Prechter, The Wave Principle of Human Social Behavior, New Classics Library (1999), pp. 152–153.
  9. ^ a b Shiller, Robert J. (2000). Irrational Exuberance. Princeton University Press. pp. 149–153. Retrieved 4 March 2013. 
  10. ^ In Focus article (8 June 2012), "WNFM: A Focus on Fundamentals One Year After Fukushima", Reproduced article from Nuclear Market Review, TradeTech, retrieved 4 March 2013  There are several reproduced In Focus articles on this page. The relevant one is near the bottom, under the title in this reference 
  11. ^ UraniumSeek.com, Gold Seek LLC (2008-08-22). "Uranium Has Bottomed: Two Uranium Bulls to Jump on Now". UraniumSeek.com. Retrieved 2011-09-19. 
  12. ^ "Uranium Bubble & Spec Market Outlook". News.goldseek.com. Retrieved 2011-09-19. 
  13. ^ Banerjee, Abhijit V. (1992). "A Simple Model of Herd Behavior". Quarterly Journal of Economics 107 (3): 797–817. doi:10.2307/2118364. 
  14. ^ Bikhchandani, Sushil; Hirshleifer, David; Welch, Ivo (1992). "A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades". Journal of Political Economy 100 (5): 992–1026. doi:10.1086/261849. 
  15. ^ Froot, K; Schaferstein, DS; Jeremy Stein, J (1992). "Herd on the street: Informational inefficiencies in a market with short-term speculation" (PDF). Journal of Finance 47: 1461–1484. doi:10.1111/j.1540-6261.1992.tb04665.x. 
  16. ^ Hirshleifer, D; Teoh, SH (2003). "Herd behaviour and cascading in capital markets: A review and synthesis" (PDF). European Financial Management 9 (1): 25–66. doi:10.1111/1468-036X.00207. 

Further reading[edit]

  • Bikhchandani, Sushil; Hirshleifer, David; Welch, Ivo (1992). "A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades". Journal of Political Economy 100 (5): 992–1026. doi:10.1086/261849. JSTOR 2138632. 
  • Trotter, Wilfred (1914). The Instincts of the Herd in Peace and War. 
  • Brunnermeier, Markus Konrad (2001). Asset Pricing under Asymmetric Information: Bubbles, Crashes, Technical Analysis, and Herding. Oxford, UK ; New York: Oxford University Press. 
  • Rook, Laurens (2006). "An Economic Psychological Approach to Herd Behavior". Journal of Economic Issues 40 (1): 75–95. 
  • Hamilton, W. D. (1970). Geometry for the Selfish Herd. Diss. Imperial College. 
  • Stanford, Craig B. (2001). "Avoiding Predators: Expectations and Evidence in Primate Antipredator Behaviour". International Journal of Primatology 23: 741–757. doi:10.1023/A:1015572814388.  Ebsco. Fall. Keyword: Herd Behaviour.
  • Ottaviani, Marco; Sorenson, Peter (2000). "Herd Behavior and Investment: Comment". American Economic Review 90 (3): 695–704. doi:10.1257/aer.90.3.695. JSTOR 117352. 
  • Altshuler, E.; et al. (2005). "Symmetry Breaking in Escaping Ants". The American Naturalist 166: 643–649. doi:10.1086/498139. 
  • Hey, John D.; Morone, Andrea (2004). "Do Markets Drive out Lemmings—or Vice Versa?". Economica 71 (284): 637–659. doi:10.1111/j.0013-0427.2004.00392.x. JSTOR 3548984.