Consider this:
- People who live near each other increase their ownership of stocks around the same time.
- 401(k) investors put more money into stocks when their co-workers have recently earned high returns that way.
- Mutual-fund managers are more likely to invest in a company when other stock-pickers in the same city are also buying it.
Nobel Prize-winning economist Robert Shiller found that for 62% of individual investors and a shocking 75% of institutional investors, the decision to invest in stocks with hot recent returns had nothing to do with a “systematic search.”
Instead, these investors seemed to chase whatever grabbed their attention the most because other people were talking about it.
And it is not only in investing. “Group attention” – the experience of simultaneous co-attention with one’s group members – increases emotional intensity relative to attending alone. Greater fear, gloom, and glee is a result from group attention to scary, sad, and happy events, respectively.
Individuals come to feel more when they are together.
Sources:
Comments are closed, but trackbacks and pingbacks are open.