Herding, social influence and economic decision-making: socio-psychological and neuroscientific analyses
Open accessAbstract
Typically, modern economics has steered away from the analysis of sociological and psychological factors and has focused on narrow behavioural assumptions in which expectations are formed on the basis of mathematical algorithms. Blending together ideas from the social and behavioural sciences, this paper argues that the behavioural approach adopted in most economic analysis, in its neglect of sociological and psychological forces and its simplistically dichotomous categorization of behaviour as either rational or not rational, is too narrow and stark. Behaviour may reflect an interaction of cognitive and emotional factors and this can be captured more effectively using an approach that focuses on the interplay of different decision-making systems. In understanding the mechanisms affecting economic and financial decision-making, an interdisciplinary approach is needed which incorporates ideas from a range of disciplines including sociology, economic psychology, evolutionary biology and neuroeconomics.
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When others are seen to panic buy, this may intensify perceived scarcity and increase the motivation to panic buy, resulting in herd behaviour.
“when others are seen to panic buy, this may intensify the perceived scarcity of a product and increase the motivation to panic buy, resulting in herd behaviour (Baddeley, 2010; Loxton et al., 2020; Zheng et al., 2020).”
From Why did all the toilet paper disappear? Distinguishing between panic buying and hoarding during COVID-19 (2021) · cites this paper as Baddeley, 2010
Section 2 (page unavailable) explains that people may follow others’ actions under uncertainty, producing herding. The paper does not describe panic buying or say that seeing others buy increases perceived product scarcity, so it supports the general herding mechanism but not the specific scarcity-driven account. (LLM, conf=0.86)
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Network dynamics of social influence in the wisdom of crowds
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“Further, when others are seen to panic buy, this may intensify the perceived scarcity of a product and increase the motivation to panic buy, resulting in herd behaviour (Baddeley, 2010; Loxton et al., 2020; Zheng et al., 2020).”
Background
- Authors
- Baddeley, M.
- Affiliations
- University of Cambridge (GB)
- Corresponding author
- Baddeley, Michelle
- ORCID
- Baddeley, Michelle
- Venue
- Philosophical Transactions of the Royal Society B: Biological Sciences
- Publisher
- The Royal Society
- Published
- 2010-01-27
- Volume
- 365
- Issue
- 1538
- Pages
- 281-290
- ISSN
- 0962-8436 (ISSN-L)
- 1471-2970
- PMC
- PMC2827453
- OpenAlex
- W2167751203
- Cited by
- 286
- References
- 10
- Citations by year
- 2026: 14 · 2025: 24 · 2024: 35 · 2023: 25 · 2022: 33 · 2021: 17 · 2020: 17 · 2019: 43 · 2018: 13 · 2017: 21 · 2016: 10 · 2015: 5 · 2014: 10 · 2013: 6 · 2012: 3
- FWCI
- 2.61
- Type
- journal article
- Language
- en
- Open access
- green
- www.ncbi.nlm.nih.gov
- Locations
- Philosophical Transactions of the Royal Society B Biological Sciences (publishedVersion)
- PubMed Central (publishedVersion)
- PubMed (publishedVersion)
- Adelaide Research & Scholarship (AR&S) (University of Adelaide) (submittedVersion)
- UCL Discovery (University College London) (submittedVersion)
- Topics
- Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
- Social Sciences › Safety Research › Experimental Behavioral Economics Studies
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Keywords
- herding behavior, social influence, economic decision-making, behavioral economics, neuroeconomics, economic psychology, rationality, cognitive and emotional factors, decision-making systems, interdisciplinary economics, financial decision-making
- MeSH terms
- Affect, Bayes Theorem, Brain, Decision Making, Decision Theory, Economics, Emotions, Biological Evolution, Humans, Models, Psychological, Personality, Social Behavior
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