Herd Instinct

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Herd Instinct

A sociological phenomenon in which everyone does what everyone else seems to be doing. In investing, the herd instinct is seen most commonly in panic sells and rallies that occur without regard for broader indicators. That is, regardless of the sustainability of a rally or the overreaction of the sell-off, the concept of a herd instinct suggests that traders will continue to follow the trend until contrary evidence becomes overwhelming (or simply until they calm down). See also: Behavioral economics, Crowd.
References in periodicals archive ?
Herd behavior in financial markets, IMF Staff Papers, pp.279-310.
(2000) "Herd Behavior in Financial Markets." IMF Staff Papers 47 (3): 279-310.
These factors include self-judgment of saving and risk, self-judgment of price and profit, reliance on expert's opinion, herd behavior, self-judgment based on past performance, growing company and actively trading shares and fear of taxes.
Venturino, "Modeling herd behavior in population systems," Nonlinear Analysis: Real World Applications, vol.
(29) Some even argue that herd behavior may represent an
Finally, 5 types of smoking warning signs which are (1) the standard no smoking sign, signs with the application of (2) Loss Aversion (PHWs signs), (2) Altruism (signs with the picture of second-hand smokers such as pregnant mother, child, elder), (3) Herd Behavior (signs with celebrities promoting no smoking), and (4) Information (signs with an information about the negative effect of smoking) are added in the model with 4 dummy variables given that the original no smoking sign is a base case.
For the positive ROI, FRN evoked after herd behavior (M = 5.60, SE = 0.90) was more negative than that after antiherd behavior (M = 6.83, SE = 1.03) [F (1, 20) = 4.34, p [less than or equal to] 0.05].
An examination of herd behavior in four mediterranean stock markets.
Cattle in small, familiar, intensively managed paddocks may exhibit different herd behavior than those in extensive rangeland grazing situations.
It is important to identify herd behavior early on.
The major components that explained 70.865% of the total variance in investor behavior in PMEX were: overconfident behavior' herd behavior' price anchoring behavior' representativeness bias' loss averse behavior' panic attitude' and risk tolerance'.
Bellwethers serve as an indicator and predictor of herd behavior.