Herd mentality is prevalent in financial markets from "summary" of Irrational Exuberance by Robert J. Shiller
The idea that investors often move in herds is a central theme in understanding the dynamics of financial markets. When people see others buying or selling a particular asset, they are more likely to follow suit, regardless of the underlying fundamentals. This behavior can lead to wild swings in asset prices that are not always justified by economic conditions. Herd mentality can be particularly prevalent during times of market exuberance or panic. In times of exuberance, investors may feel like they are missing out on potential gains if they do not jump on the bandwagon. This fear of missing out can lead to speculative bubbles where asset prices are driven far above their intrinsic value. Conversely, in times of panic, investors may be quick to sell off their assets for fear of losing even more money. This can exacerbate market downturns as more and more investors rush to ...
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