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Economics

Study Notes

Herd Behaviour (Behavioural Economics)

Level:
AS, A Level
Board:
AQA, Edexcel, OCR, IB

We are herd animals and we often make decisions based in part on who is around us and the choices they make.

Behavioural Economics - Herd Behaviour

Examples of herd behaviour might include:

  • Choosing items off a menu in a restaurant when part of a group
  • Herd behaviour of investors in financial markets - e.g. a stampede to sell when prices start falling
  • Binge drinkers going on holiday with each other
  • Fanatical supporters of football clubs

Herd behaviour reminds us that most decisions are taken in a social context.

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