why the bandwagon effect happens
the bandwagon effect arises primarily from psychological and sociological factors people are biologically programed to be social and like to be part of a group behaving the same way a group does can lead to belonging and acceptance people also like to be on the winning team and to signal their social identity to do so they adopt the behavior of the group around them and that behavior begins to seem desirable or normal due to proximity and repetition the human brain uses shortcuts known as heuristics to make decisions more efficiently one of these shortcuts is looking at what other people are doing if enough people are following a trend repeating a statement or making the same decision your brain will assume that it s the correct decision to make economically this can make sense as it allows you to economize on the costs of gathering information by relying on the knowledge and opinions of others for example if you are having a baby you could spend hours researching different baby strollers and trying to find the best option or if everyone you know has the same baby stroller model you might decide that s the best one because everyone else uses it as long as it is a good stroller you would have saved yourself hours of time lost to research that you didn t need on the other hand following what the group does without considering its full implications can cause problems this was seen in the lead up to the housing crisis in 2007 financial institutions all joined the subprime mortgage bandwagon creating an unregulated and unstable housing bubble investors and buyers all believed the market would continue to be stable because everyone else also believed it would remain stable this proved to be a false belief and led to the great recession of 2007 2009 repetition can also affect what people believe to be true people tend to believe claims are more true if they have been exposed to them more this is why advertisements propaganda and false news all work they expose people to the same idea over and over this is known as the illusory truth effect this can become part of the bandwagon effect as well you may support one sports team but if everyone you know constantly talks about how much better a different sports team is it starts to seem like a true statement the repetition alone may be enough to convince you to follow the crowd and start supporting the new team impact of the bandwagon effect in different areasthe bandwagon effect can be seen in different areas of everyday life it can be seen in everyday social behavior such as smoking because your friends smoke or exercising because your friends exercise it is also often at work in the fields of politics consumer behavior and finance 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 band through a parade during the 19th century an entertainer named dan rice traveled the country 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 20th century bandwagons were commonplace in political campaigns and jump on the bandwagon had become a derogatory term used to describe the social phenomenon of wanting to be part of the majority even when it means going against one s principles or beliefs consumers often economize on the cost of gathering information and evaluating the quality of consumer goods by relying on the opinions and purchasing behavior of other consumers to some extent this is a beneficial and useful tendency if other people s preferences are similar their consumption decisions are rational and they have accurate information about the relative quality of available consumer goods then it makes perfect sense to follow their lead and effectively outsource the cost of gathering information to someone else however this kind of bandwagon effect can create a problem in that it gives every consumer an incentive to free ride on the information and preferences of other consumers to the extent that it leads to a situation where information regarding consumer products might be underproduced or produced solely or mostly by marketers it can be criticized for example people might buy a new electronic item because of its popularity regardless of whether they need it can afford it or even really want it bandwagon effects in consumption can also be related to conspicuous consumption where consumers buy expensive products as a signal of economic status the bandwagon effect has been identified in behavioral economics as well investing and financial markets can be especially vulnerable to bandwagon effects because not only will the same 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 positive feedback loop of rising prices and increased demand for an asset related to george soros concept of reflexivity for example during the dotcom bubble of the late 1990s dozens of tech startups emerged that had no viable business plans no products or services ready to bring to market and in many cases nothing more than a name usually something tech sounding with com or net as a suffix despite lacking in vision and scope these companies attracted millions of investment dollars in large part due to the bandwagon effect 