Hop on the Bandwagon

I flipped through the television channels Wednesday night only to see the Phillies v. Dodgers in their final three innings of game five of the MLB National League Championship. Growing up in the Philly-area, the Phillies have always been my family’s favorite baseball team. I have attended my share of games in the past, but to be perfectly honest, I think I only watched one or two other games this season. For some reason, however, I felt compelled to watch the end of the game – to see the Phillies clinch their spot in the World Series. Speaking of the World Series, which was another game that I watched, I still remember the moment when the Phillies won last year – I could hear the roar of exhilarated fans resonating down the street.

The question is: why did I feel the need to watch the “big game” when I clearly do not have much invested in the team? Of course, millions more watch the Super Bowl each year than tune into the featured Sunday game, but the social circumstances surround the game can mostly explain that. I was sitting in my bedroom watching the game – by myself. I did not watch because I was invited to a party in honor of watching the game, nor did I sit down to watch it with a friend who had already turned it on.

This “bandwagon effect” is a phenomenon associated with herd behavior. As more and more people start to do something, in this case, watch a baseball game, the attention mounts, and the number of followers only escalate further. The theory originates from observing what happens to herds in panic situations; as the members of a herd of animals start to panic, they move together, attempting to force themselves into the center of the herd for more protection. A similar effect happens with people. When looking for a restaurant for dinner, do you walk into the empty restaurant or do you find yourself being gravitated toward the crowded restaurant, despite the lines? The rationale is that the empty restaurant must not be very good, hence the lack of customers. Regardless of the actual quality of the crowded restaurant, the perception is key. A crowd of people conveys the notion that the crowd must be right. In respect to watching sports, as there is more and more talk about an upcoming final game or a close match-up, the desire to watch the game and be “part of something” mounts.

The same effect happens in financial markets. Ever wonder why the price of houses was able to rise so quickly and form the bubble? – Herd behavior. As more people took out mortgages and traded-up and entrepreneurs bought and flipped houses, interest in the market heightened, driving up demand and causing prices to rise. The mass movement of groups of people causes havoc in the financial world – the major peaks of valleys of the stock market are a result a frenzied transactions, amplifying effects. Herd behavior can be observed in every aspect of society in every decision that is made. The idea of “majority rules” is a powerful force, especially when there is no other basis for a decision. The popularity of toys, movies, and clothes are fostered by the hype surrounding them. If enough momentum of a product or event is cultivated, the herd can just take over and propel something into the limelight.