Herd Instinct

A mentality found in an individual that is distinguished by a lack of decision-making or introspection by his own causing people to think and behave similarly to those around them is called as herd instinct. In finance, it relates to instances where investors gravitate towards an investment which could be same or similar, based on the fact that many others are buying those securities. The driving force behind this mentality is the fear of missing out on a profitable investment.
Also known as herding, herd instinct plays a crucial role in driving the asset bubbles in financial markets. By nature, humans desire to be a part of a community where people have shared culture and socioeconomic norms. At the same time, they cherish their individuality and also make them responsible for their own welfare. 

In the world of investments it is common to find herd instinct. For example, when a group of investors starts worrying about stock prices, this concern would also spread rapidly among other investors. Soon, many would feel vulnerable and sells off the securities. This decision is said to have risen because if their herd instinct or group-minded mentality.

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