Social Proof: Why Do We Follow The Herd?
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We human beings psychologically are social animals, it’s in our DNA to follow what others are doing or following the herd.
It’s a herd mentality that brings us happiness & sometimes even sadness, it helps to make the right decisions & even wrong, it helps us to live a wonderful life & sometimes it even takes our lives.
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Social Proof
Suppose, one day you are going to your office and you find all people standing with their face towards the back of the elevator?
Watch this video that explains an elevator experiment on herd mentality.
As you can see that, most people fell for what all other people are doing in the elevator, without even thinking or questioning, they just did.
They don’t want to look like the odd one out or they feel that if everyone else is doing then there must be some reason for it – this tendency is Social Proof.
Social Proof is a psychological and social phenomenon wherein people copy the actions of others in an attempt to undertake behavior in a given situation. Social proof is considered prominent in ambiguous social situations where people are unable to determine the appropriate mode of behavior, and is driven by the assumption that the surrounding people possess more knowledge about the current situation.
– Source: Wikipedia.org
Why do we follow the herd?
Well, we follow the herd because this has been wired in human beings since the beginning of homo sapiens, it makes our life easier and comfortable when we stay in a herd, it protects us from criticism as well as we feel less blamed when everyone else is also doing the same.
There are many benefits of social proof but also there is a dark side of it. Let’s understand them too.
Social Proof Benefits
Social Proof has many benefits it helps us in our day to day decision making processes, it helps us in buying good products online, it helps us to avail the best services because we make decisions by reading other people’s reviews online.
The reviews given by other peoples and then reading them helps us to decide whether to take it or not, most of the time the decision turns right.
So, social proof has tremendous benefits like this in our day to day decision making processes, but as I said it has a dark side too.
Dark Side
The dark side of social proof is that sometimes it costs people their lives too.
With the tendency of Social Proof many leaders, con men, and even terrorists influence most of the people to do crimes, mass suicides, etc and many innocent people fell for this.
As they are unaware of this tendency they just do what everybody else around them is doing without knowing it’s right or wrong.
We must understand this tendency in order to make the correct decision in our life too,
The understanding of these tendencies helps us to broaden our mindset and it becomes another tool in our mental arsenal which helps us to become wise & successful.
Your Take Away
You must understand this tendency of social proof and always keep in mind to make your decisions based on your own facts and not just because everyone is taking the same decision.
In Investing, never select a mutual fund or stock because everyone else is selecting the same also don’t just invest by reading everyone’s reviews like you do for online shopping.
Investing is more than just buying a product – it’s a process that will create wealth for you – So use the information as a part of your resources to help you in understanding and your decision making, It should not be just a mere decision based on other’s decisions.
Hi, I’m Managing Director at Gurpreet Saluja Financial Services where I help my investors to invest in mutual funds and achieve their financial goals. I’m also a Value Investor and here I write about Personal Finance & Investing.