Herd mentality describes how people are influenced by their peers to adopt certain behaviors, follow trends, and/or purchase items. Examples of the herd mentality include the early adopters of high technology products such as smart phones and iGadgets, as well as stock market trends, fashions in apparel, cars, home décor, etc. Social psychologists study the related topics of group intelligence, crowd wisdom, and decentralized decision making (e.g.voting).
Marketing and behavioral finance researchers study the effects of the herd mentality on consumer behavior and stock market investments, including topics such as early adopters, prediction markets, and Delphi methods for predicting buying patterns. Corporate marketing forecasters attempt to produce accurate pictures of future consumer behavior using the above-referenced methods of understanding.
The term herd mentality is derived from the word “herd,” meaning a group of (e.g. animals), and “mentality,” implying a certain frame of mind. However the most succinct definition would be: how large numbers of people act in the same ways at the same times.
Herd behavior is distinguished from herd mentality because it applies to all animals, whereas the term “mentality” implies a uniquely human phenomenon. Herd mentality implies a fear-based reaction to peer pressure which makes individuals act in order to avoid feeling “left behind or left outside” the group.