What Is the Bandwagon Effect ?
The bandwagon effect is a psychological phenomenon in which people do something primarily because other people are doing it, regardless of their own beliefs, which they may ignore or override. This tendency of people to align their beliefs and behaviors with those of a group is besides called a herd mentality. The term “ bandwagon effect ” originates from politics but has wide implications normally seen in consumer behavior and investment activities. This phenomenon can be seen during talk through one’s hat markets and the growth of asset bubbles .
- The bandwagon effect is when people start doing something because everybody else seems to be doing it.
- The bandwagon effect can be attributed to psychological, social, and economic factors.
- The bandwagon effect originates in politics, where people vote for the candidate who appears to have the most support because they want to be part of the majority.
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Understanding the Bandwagon Effect
The bandwagon impression arises from psychological, sociological, and, to some extent, economic factors. People like to be on the gain team and they like to signal their social identity. Economically, some amount of bandwagon effect can make sense, in that it allows people to economize on the costs of gathering information by relying on the cognition and opinions of others. The bandwagon effect permeates many aspects of life, from stock markets to clothing trends to sports fandom .
In politics, the bandwagon effect might cause citizens to vote for the person who appears to have more popular support because they want to belong to the majority. The term “ bandwagon ” refers to a wagon that carries a ring through a parade. During the nineteenth hundred, an entertainer named Dan Rice traveled the state campaigning for President Zachary Taylor. Rice ‘s bandwagon was the centerpiece of his campaign events, and he encouraged those in the crowd to “ jump on the bandwagon ” and support Taylor. By the early twentieth hundred, bandwagons were commonplace in political campaigns, and “ alternate on the bandwagon ” had become a derogative term used to describe the social phenomenon of wanting to be depart of the majority, tied when it means going against one ‘s principles or beliefs.
Consumers much economize on the price of gathering information and evaluating the quality of consumer goods by relying on the opinions and purchasing behavior of early consumers. To some extent, this is a beneficial and useful tendency ; if early people ‘s preferences are alike, their pulmonary tuberculosis decisions are rational number, and they have accurate information about the proportional choice of available consumer goods, then it makes perfective smell to follow their lead and efficaciously outsource the price of gathering data to person else .
however, this kind of bandwagon effect can create a problem in that it gives every consumer an bonus to free ride on the information and preferences of early consumers. To the extent that it leads to a situation where information regarding consumer products might be underproduce, or produced entirely or largely by marketers, it can be criticized. For case, people might buy a raw electronic detail because of its popularity, regardless of whether they need it, can afford it, or even in truth want it .
Bandwagon effects in consumption can besides be related to blatant consumption, where consumers buy expensive products as a sign of economic status .
investment and finance
Investing and fiscal markets can be particularly vulnerable to bandwagon effects because not only will the lapp kind of social, psychological, and information-economizing factors occur, but additionally the prices of assets tend to rise as more people jump on the bandwagon. This can create a incontrovertible feedback loop of rising prices and increase demand for an asset, related to George Soros ‘ concept of reflexivity .
For example, during the dotcom ripple of the belated 1990s, dozens of technical school startups emerged that had no viable occupation plans, no products or services ready to bring to market, and in many cases, nothing more than a diagnose ( normally something tech-sounding with “ .com ” or “ .net ” as a suffix ). Despite lacking in vision and setting, these companies attracted millions of investment dollars in large partially due to the bandwagon effect .