Herd effect: how collective psychology impacts decisions.

One of the best known phenomena in market psychology is the herd effect: the tendency of people to follow the majority. This explains financial bubbles, such as dotcom or cryptocurrency bubbles at certain times. In the business world, management fads and copied strategies arise by the same effect. The smart strategy is to understand collective behavior without being fully absorbed by it. Knowing when to follow the herd to seize short-term opportunities and when to distance yourself to maintain critical vision can determine success.