Groupthink and Information Cascades
Groupthink is a psychological phenomenon that occurs with a decision making group when members of the group succumb to group pressure and overlook reasonable thinking and judgement in the name of harmony. It occurs in situations where members ignore alternatives and have similar backgrounds which increases the propensity for them to all agree on a rather irrational or poor decision based on some common factor in their individual thought processes or the ability for them to easily persuade one another. Groupthink occurs in several aspects of our society on all levels of social groups from friends in grade school, to journalists in media companies and even among politicians in Congress. Studies have shown that groupthink has a played role in major events such as the US failure to anticipate the Pearl Harbor attack, the Bay of Pigs Invasion and the 2003 Space Shuttle Columbia disaster.
Groupthink relates to information cascades in quite an interesting way; both of them cause people to “follow the crowd” in order to gain some perceived benefit. In information cascades, people imitate others who are making the same decisions they are based on informational effects, they are receiving some kind of important information from others behavior that implies they would benefit from behaving in the same way. They may also imitate others if they receive a direct benefit such as when people join a social network because many of their friends use it, which it means it has more value to them. Groupthink causes people to imitate each other to achieve harmony and not be seen as the odd one out as conforming is always the easier thing to do. It was noted in the book that information cascades have a stronger effect when conforming groups are larger because it gives people more of a reason to join in. The same goes for groupthink because the larger a group is the more people will be willing to go along with the majority decision even if it goes against their personal values/morals because of a fear of being singled out and because its much easier to conform in such situations.
http://www.psysr.org/about/pubs_resources/groupthink%20overview.htm