Herd mentality: Are we programmed to make bad decisions?
Herd mentality: Are we programmed to make bad decisions?
https://www.sciencedaily.com/releases/2014/12/141216212049.htm
Research led by the University of Exeter has shown that individuals are heavily influenced by their neighbors, hindering their decision-making skills. Rather than relying on their instinct, people tend to veer towards being a part of a “crowd.” This behavior damages their ability to be responsive to environment and social changes. The lead author of the report, Dr. Colin Torney, states that “social influence is a powerful force in nature and society.” He explains how in many situations, copying the behaviors of others can be a useful strategy. However, it may not be as useful when our personal beliefs conflict with the actions of others.
This study relates to our discussion in class about information cascades and the spread of information. We discussed how decision-making includes a choice between following your private information versus following what others are doing. We also discussed the principles of information cascades (many people doing the same thing). One principle is that cascades can happen easily, even with participants reasoning rationally about information. In addition, information cascades can lead to wrong decisions, can be based on very little genuine information, and can be fragile. These principles led to the discussion of conditional probability, a tool for evaluating claims under uncertainty, given evidence (Bayes’ Rule). The general model of information cascades includes 3 ingredients: the hidden state of the world, payoffs, and information about the decisions.
These ingredients relate back to the study conducted at the University of Exeter. The study delved deeper to show that as humans have evolved, they have begun to overuse social information and follow others’ behaviors too often. As a result, people have more difficulty responding to changes in their environment since they don’t spend enough time reflecting on their own decisions. The team created several mathematical models of decision-making in a dynamic environment to prove how the use of social information has evolved. The models exemplified how individuals overly rely on social information from those around them. This study and our discussion about information cascades in class demonstrate the classic conflict between individual and collective interest.