In uncertain situations, we often look for social cues about what to do based on what everyone else is doing. This kind of social proof can be highly effective in helping us to navigate what to do in the absence of proper information. In fact, sometimes the effects of social proof can be remarkably powerful, causing the herd to do something dramatic because everyone else is doing it too - even if no one in the crowd actually knows why they're doing it.

Unfortunately, though, the principles of social proof are often used unintentionally, and in fact can be unwittingly applied to encourage negative behavior. Examples include teenagers making irresponsible decisions because their friends are doing it to baby boomers not saving for retirement in part because they think no one else is doing it either.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access