28. The use of the phrase ‘sun-disk’ captures the idea that the sun has a face, i.e. a disk, so the sun-disk is the face of the sun. For some more on bizarre cult teachings, see Debra Kelly (2013), ‘10 Bizarre Cult Teachings’, Listverse, 4 December. http://listverse.com/2013/12/04/10-bizarre-cult-teachings (accessed 7 September 2017).
29. Janet Reitman (2013), Inside Scientology: The Story of America’s Most Secretive Religion, Boston, MA: Mariner Books/Houghton Mifflin Harcourt.
30. Lou Manza (2016), ‘How Cults Exploit One of Our Most Basic Psychological Urges’, The Conversation, 14 April. https://theconversation.com/how-cults-exploit-one-of-our-most-basic-psychological-urges–57101 (accessed 27 October 2017); Mark Banschick (2013), ‘What Awful Marriages and Cults Have in Common’, Psychology Today, 28 May. https://www.psychologytoday.com/blog/the-intelligent-divorce/201305/what-awful-marriages-cults-have-in-common (accessed 27 October 2017).
31. Dorian Lynskey (2013), ‘Beatlemania: “The Screamers” and Other Tales of Fandom’, Guardian, 29 September. https://www.theguardian.com/music/2013/sep/29/beatlemania-screamers-fandom-teenagers-hysteria (accessed 7 September 2017).
32. Martin Creasy (2010), Beatlemania!: The Real Story of The Beatles UK Tours 1963–1965, London: Omnibus Press. See also Joli Jensen (1992), ‘Fandom as Pathology: The Consequences of Characterisation’, in Lisa A. Lewis (ed.) (1992), The Adoring Audience: Fan Culture and Popular Media, London: Routledge, pp. 9–29.
33. O.G.T. Sonneck (1922), ‘Henrick Heine’s Musical Feuilletons’, Musical Quarterly 8, pp. 457–8.
34. T.R.J. Nicholson, C. Pariante and D. McLoughlin (2009), ‘Stendhal Syndrome: A Case of Cultural Overload’, British Medical Journal case reports.
35. Keynes (1936), p. 374.
36. Bikhchandani, Hirshleifer and Welch (1998).
37. ‘Extreme Tweeting’, The Economist, 21 November 2015, p. 43.
38. Ambrose Evans-Pritchard (2016), ‘“Irritation and Anger” May Lead to Brexit, Says Influential Psychologist’, Daily Telegraph, 6 June. http://www.telegraph.co.uk/business/2016/06/05/british-voters-succumbing-to-impulse-irritation-and-anger---and/ (accessed 14 June 2017).
39. Hunt Allcott and Matthew Gentzkow (2017), ‘Social Media and Fake News in the 2016 Election’, Journal of Economic Perspectives 31(2), pp. 211–36.
40. ‘Trump’s Executive Order: Who Does Travel Ban Affect?’, BBC News, 10 February 2017. http://www.bbc.com/news/world-us-canada-38781302 (accessed 10 February 2017).
41. ‘Donald Trump’s File’, PolitiFact. http://www.politifact.com/personalities/donald-trump/ (accessed 5 September 2017).
42. ‘Hillary Clinton’s File’, PolitiFact. http://www.politifact.com/personalities/hillary-clinton/ (accessed 7 September 2017).
43. For an assessment of social media, see ‘Social Media’s Threat to Democracy’, The Economist, 4 November 2017.
44. Sunstein (2002).
45. Craig Silverman (2016), ‘This Analysis Shows How Viral Fake Election News Stories Outperformed Real News on Facebook’, BuzzFeed News, 17 November. https://www.buzzfeed.com/craigsilverman/viral-fake-election-news-outperformed-real-news-on-facebook?utm_term=.fqNdd13EE#.ljw44EBpp; Timothy B. Lee (2016), ‘The Top 20 Fake News Stories Outperformed Real News at the End of the 2016 Campaign’, Vox, 16 November. https://www.vox.com/new-money/2016/11/16/13659840/facebook-fake-news-chart (accessed 18 November 2016).
46. Cass R. Sunstein (2017), #Republic: Divided Democracy in the Age of Social Media, Princeton University Press.
47. For example, see Seth Flaxman, Sharad Goeal and Justin M. Rao (2016), ‘Filter Bubbles, Echo Chambers, and Online News Consumption’, Public Opinion Quarterly 80, pp. 298–320.
48. See also Fil Menzer (2016), ‘The Spread of Misinformation in Social Media’, Northwestern Institute on Complex Systems seminar. http://cnets.indiana.edu/blog/2016/10/10/spread-of-misinformation/ (accessed 7 September 2017).
Conclusion: Copycats versus contrarians
1. Social capital is a concept first explored by sociologists and psychologists: for example, see Jane Jacobs (1961), The Death and Life of Great American Cities, New York: Random House; James S. Coleman (1988), ‘Social Capital in the Creation of Human Capital’, American Journal of Sociology 94, pp. 95–120; Robert D. Putnam (1993), ‘What Makes Democracy Work?’, National Civic Review 82(2), pp. 101–7; and David Halpern (2005), Social Capital, Cambridge: Polity Press. For a survey of some of the economists’ insights about social capital, particularly in the context of developing economies, see Partha Dasgupta and Ismail Serageldin (eds) (2010), Social Capital: A Multifaceted Perspective, Washington, DC: The International Bank for Reconstruction and Development/World Bank. Some of this literature is summarised for a general reader in Partha Dasgupta (2007), Economics: A Very Short Introduction, Oxford University Press.
2. Mark S. Granovetter (1973), ‘The Strength of Weak Ties’, American Journal of Sociology 78(6), pp. 1360–80.
3. Robert Putnam introduced a parallel between strong ties and weak ties as bonding versus bridging forms of social capital. Strong ties bond people closely; weak ties are more like bridges that connect people more gently. See Robert D. Putnam (2000), Bowling Alone: The Collapse and Revival of American Community, New York/London: Simon and Schuster.
4. Thaler and Sunstein (2008), in particular ch. 3, ‘Following the herd’.
5. For an analysis of nudges from the perspective of psychologist David Halpern, director of the UK’s Behavioural Insights Team, a.k.a. ‘the Nudge Unit’, see David Halpern (2015), Inside the Nudge Unit: How Small Changes Can Make a Big Difference, London: Ebury Press.
6. Sunstein (2002).
Further reading
Introduction
Earls, Mark (2009). Herd: How to Change Mass Behavior by Harnessing Our True Nature, Chichester: John Wiley and Sons.
Surowiecki, James (2004). The Wisdom of Crowds: Why the Many Are Smarter Than the Few, London: Abacus Books.
1 Clever copying
Akerlof, George A. and Rachel E. Kranton (2000). ‘Economics and Identity’, Quarterly Journal of Economics 115(3), pp. 715–53.
— (2011). Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being, Princeton University Press.
Anderson, Lisa R. and Charles A. Holt (1996). ‘Classroom Games: Information Cascades’, Journal of Economic Perspectives 10(4), pp. 187–93.
— (1997). ‘Information Cascades in the Laboratory’, American Economic Review 87(5), pp. 847–62.
Banerjee, Abhijit (1992). ‘A Simple Model of Herd Behavior’, Quarterly Journal of Economics 107(3), pp. 797–817.
Bernheim, B. Douglas (1994). ‘A Theory of Conformity’, Journal of Political Economy 102(5), pp. 841–77.
Bikhchandani, Sushil, David Hirshleifer and Ivo Welch (1992). ‘A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades’, Journal of Political Economy 100(5), pp. 992–1026.
— (1998). ‘Learning from the Behavior of Others: Conformity, Fads, and Informational Cascades’, Journal of Economic Perspectives 12(3), pp. 151–70.
Chamley, Christophe P. (2003). Rational Herds: Economic Models of Social Learning, Cambridge University Press.
Leibenstein, Harvey (1950). ‘Bandwagon, Snob, and Veblen Effects in the Theory of Consumers’ Demand’, Quarterly Journal of Economics 64(2), pp. 183–207.
2 Mob psychology
Asch, Solomon (1952). Social Psychology, Englewood Cliff, NJ: Prentice-Hall.
— (1955), ‘Opinions and Social Pressure’, Scientific American 193(5), pp. 31–5.
Bond, Rod and Peter B. Smith (1996). ‘Culture and Conformity: A Meta-Analysis of the Studies Using Asch’s (1952b, 1956) Line Judgment Task’, Psychological Bulletin 119(1), pp. 111–37.
Cialdini, Robert B. (2007). Influence: The Psychology of Persuasion, New York: HarperCollins.
Freud, Sigmund (1991). Civilization, Society and Religions: ‘Group Psychology and the Analysis of the Ego’, ‘Future of An Illusion’
and ‘Civilization and Its Discontents’, Penguin Freud Library, London: Penguin Books.
— (2010). Sigmund Freud Collected Works: The Psychopathology of Everyday Life, The Theory of Sexuality, Beyond the Pleasure Principle, The Ego and the Id, and The Future of an Illusion, trans. A.A. Brill, Seattle, WA: Pacific Publishing Studio.
Le Bon, Gustave (1895). The Crowd: A Study of the Popular Mind, Lexington, KY: Maestro Reprints.
Mackay, Charles (1841). Extraordinary Popular Delusions and the Madness of Crowds, Lexington, KY: Maestro Reprints.
Reich, Wilhelm (1946). The Mass Psychology of Fascism, trans. Theodore P. Wolfe, New York: Orgone Institute Press.
Shiller, Robert J. (1995). ‘Conversation, Information and Herd Behavior’, American Economic Review 85(2), pp. 181–5.
Tajfel, Henri (1970). ‘Experiments in Intergroup Discrimination’, Scientific American 223, pp. 96–102.
Tajfel, Henri, M.G. Billig, R.P. Bundy and Claude Flament (1971). ‘Social Categorization and Intergroup Behaviour’, European Journal of Social Psychology 1(2), pp. 149–78.
3 Herding on the brain
Baddeley, Michelle (2010). ‘Herding, Social Influence and Economic Decision-Making: Socio-Psychological and Neuroscientific Analyses’, Philosophical Transactions of the Royal Society B 365(1538), pp. 281–90.
Burke, Christopher, Michelle Baddeley, Philippe Tobler and Wolfram Schultz (2010). ‘Striatal BOLD Response Reflects the Impact of Herd Information on Financial Decisions’, Frontiers in Human Neuroscience 4, article 48. https://doi.org/10.3389/fnhum.2010.00048 (accessed 5 September 2017).
Camerer, Colin F., George Loewenstein and Drazen Prelec (2005). ‘Neuroeconomics: How Neuroscience Can Inform Economics’, Journal of Economic Literature 43(1), pp. 9–64.
Damasio, Antonio (1994/2006). Descartes’ Error: Emotion, Reason and the Human Brain, London: Vintage.
Hurley, Susan and Nick Chater (eds) (2005). Perspectives on Imitation: From Neuroscience to Social Science, Cambridge, MA: MIT Press.
Iacoboni, Marco, Roger P. Woods, Marcel Brass, Harold Bekkering, John C. Mazziotta and Giacomo Rizzolatti (1999). ‘Cortical Mechanisms of Human Imitation’, Science 286, pp. 2526–8.
Kahneman, Daniel (2011). Thinking, Fast and Slow, New York: Farrar, Straus and Giroux.
Klucharev, Vasily, Kaisa Hytönen, Mark Rijpkema, Ale Smidts and Guillén Fernández (2009). ‘Reinforcement Learning Signal Predicts Social Conformity’, Neuron 61(1), pp. 140–51.
4 Animal herds
Axelrod, Robert (1984). The Evolution of Cooperation, Cambridge, MA: Basic Books.
Blackmore, Susan (1999). The Meme Machine, Oxford University Press.
Cohen, Jonathan D. (2005). ‘The Vulcanization of the Human Brain: A Neural Perspective on Interactions between Cognition and Emotion’, Journal of Economic Perspectives 19(4), pp. 3–24.
Danchin, Étienne, L.-S. Giraldeau, T.J. Valone and R.H. Wagner (2004). ‘Public Information: From Nosy Neighbours to Cultural Evolution’, Science 305, pp. 487–91.
Darwin, Charles (1859/2011). On the Origin of Species (Collins Classics edn), New York: HarperCollins.
Davies, Nicholas B., John R. Krebs and Stuart A. West (2012). An Introduction to Behavioural Ecology (4th edn), Oxford: Wiley Blackwell.
Dawkins, Richard (1976). The Selfish Gene, Oxford University Press.
Gould, Stephen Jay (2001). The Lying Stones of Marrakech: Penultimate Reflections in Natural History, London: Vintage.
Kirman, Alan (1993). ‘Ants, Rationality and Recruitment’, Quarterly Journal of Economics 108(1), pp. 137–56.
Lynch, Aaron (1996). Thought Contagion: How Belief Spreads Through Society, New York: Basic Books.
Maynard Smith, John (1974). ‘The Theory of Games and the Evolution of Animal Conflicts’, Journal of Theoretical Biology 47, pp. 209–21.
Morris, Desmond (1967). The Naked Ape: A Zoologist’s Study of the Human Animal, London: Jonathan Cape.
Raafat, Ramsey M., Nick Chater and Chris Frith (2009). ‘Herding in Humans’, Trends in Cognitive Sciences 13(10), pp. 420–8.
Rizzolatti, Giacomo and Laila Craighero (2004). ‘The Mirror Neuron System’, Annual Review of Neuroscience 27(1), pp. 169–92.
Safina, Carl (2015). Beyond Words: What Animals Think and Feel, New York: John Macrae/Henry Holt and Company.
Shermer, Michael (2009). The Mind of the Market: How Biology and Psychology Shape Our Economic Lives, New York: Henry Holt and Company.
Simon, Herbert (1990). ‘A Mechanism for Social Selection and Successful Altruism’, Science 250, pp. 1665–8.
Whitehead, Hal and Luke Rendell (2015). The Cultural Lives of Whales and Dolphins, University of Chicago Press.
Wilson, Edward O. (1975). Sociobiology: The New Synthesis, Cambridge, MA: Harvard University Press.
Wilson, Edward O. and Bert Hölldobler (2005). ‘Eusociality: Origin and Consequences’, Proceedings of the National Academy of Sciences 102(38), pp. 13367–71.
5 Mavericks
Bernheim, B. Douglas (1994). ‘A Theory of Conformity’, Journal of Political Economy 102(5), pp. 841–77.
Galeotti, Andrea and Sanjeev Goyal (2010). ‘The Law of the Few’, American Economic Review 100(4), pp. 1468–92.
Hirshleifer, David and Robert Noah (1998). ‘Misfits and Social Progress’, in Robert Noah (1998), Essays in Learning and the Revelation of Private Information, PhD Thesis, University of Michigan: ProQuest Dissertations Publishing.
Sunstein, Cass R. (2002). ‘Conformity and Dissent’, John M. Olin Law and Economics Working Paper No. 164, The Law School, University of Chicago. http://chicagounbound.uchicago.edu/public_law_and_legal_theory/68/ (accessed 5 September 2017).
Weightman, Gavin (2015). Eureka: How Invention Happens, New Haven and London: Yale University Press.
6 Entrepreneurs versus speculators
Acemoğlu, Daron (1992). ‘Learning about Others’ Actions and the Investment Accelerator’, Economic Journal 103(417), pp. 318–28.
Akerlof, George and Robert Shiller (2009). Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism, Princeton University Press.
Avery, Christopher and Peter Zemsky (1998). ‘Multidimensional Uncertainty and Herd Behavior in Financial Markets’, American Economic Review 88(4), pp. 724–48.
Baddeley, Michelle (2018). ‘Financial Instability and Speculative Bubbles: Behavioural Insights and Policy Implications’, in Alternative Approaches in Macroeconomics: Essays in Honour of John McCombie, ed. Philip Arestis, London: Palgrave Macmillan, pp. 209–34.
Butler, Timothy (2017). ‘Hiring an Entrepreneurial Leader’, Harvard Business Review, March–April, pp. 84–93,
Chancellor, Edward (1998). Devil Take the Hindmost: A History of Financial Speculation, New York/London: Plume/Penguin Books.
Devenow, Andrea and Ivo Welch (1996). ‘Rational Herding in Financial Economics’, European Economic Review 40, pp. 603–15.
Drehmann, Mathias, Jörg Oechssler and Andreas Roider (2005). ‘Herding and Contrarian Behavior in Financial Markets: An Internet Experiment’, American Economic Review 95(5), pp. 1403–26.
Garber, Peter M. (2001). Famous First Bubbles: The Fundamentals of Early Manias, Cambridge, MA: MIT Press.
Ingham, Geoffrey (2013). The Nature of Money, Cambridge: Polity Press.
Keynes, John Maynard (1936). The General Theory of Employment, Interest and Money, London: Macmillan and the Royal Economic Society; see especially chapter 12.
— (1937). ‘The General Theory of Employment’, Quarterly Journal of Economics 51(2), pp. 209–23.
Kindleberger, Charles P. and Robin Aliber (2005). Manias, Panics and Crashes: A History of Financial Crises (5th edn), Hoboken, NJ: John Wiley and Sons.
Landes, David S., Joel Mokyr and William J. Baumol (eds) (2012). The Invention of Enterprise: Entrepreneurship from Ancient Mesopotamia to Modern Times, Princeton University Press.
Lo, Andrew W., Dmitry V. Repin and Brett N. Steenbarger (20
05). ‘Fear and Greed in Financial Markets: A Clinical Study of Day Traders’, American Economic Review 95(2), pp. 352–9.
Loewenstein, George, Elke U. Weber, Christopher K. Hsee and Ned Welch (2001). ‘Risk as Feelings’, Psychological Bulletin 127(2), pp. 267–86.
Mackay, Charles (1841). Extraordinary Popular Delusions and the Madness of Crowds, Lexington, KY: Maestro Reprints.
Prechter, Robert (2016). The Socionomic Theory of Finance, Gainesville, GA: Socionomics Institute Press.
Scharfstein, D.S. and J.C. Stein (1990). ‘Herd Behavior and Investment’, American Economic Review 80(2), pp. 465–79.
Topol, Richard (1991). ‘Bubbles and Volatility of Stock Prices: Effect of Mimetic Contagion’, Economic Journal 101(407), pp. 786–800.
7 Herding experts
Baddeley, Michelle (2013). ‘Herding, Social Influence and Expert Opinion’, Journal of Economic Methodology 20, pp. 37–45.
— (2015). ‘Herding, Social Influences and Behavioural Bias in Scientific Research’, European Molecular Biology Organisation Reports 16(8), pp. 902–5.
— (2017). ‘Experts in Policy Land: Insights from Behavioral Economics on Improving Experts’ Advice for Policy-Makers’, Journal of Behavioral Economics for Policy 1(1), pp. 27–31.
Baddeley, Michelle, Andrew Curtis and Rachel Wood (2004). ‘An Introduction to Prior Information Derived from Probabilistic Judgments; Elicitation of Knowledge, Cognitive Bias and Herding’, in Geological Prior Information: Informing Science and Engineering, ed. A. Curtis and R. Wood, Geological Society, London, Special Publications 239, pp. 15–27.
Deer, Brian (2011). ‘How the Case Against the MMR Vaccine was Fixed’, British Medical Journal 342, pp. 77–82.
Kuhn, Thomas S. (1996). The Structure of Scientific Revolutions (3rd edn), University of Chicago Press.
Nichols, Tom (2017). The Death of Expertise: The Campaign Against Established Knowledge and Why It Matters, Oxford University Press.
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