Behavioral Economics (I): Conformity

Conformity is influence of majority. If anyone has a polar attitude or action, they would not prefer to reveal them against majority. People intend to modify their thoughts to blend in majority. For example , suppose that you are watching a movie with your friends at the cinema. After the ending of it, if your whole friends said that they liked it, you would agree them even though you did not like it because you do not want to be rejected by them. It is called ‘’ normative conformity’’. On the other hand, if a teacher asked a question in the class and some students answered it , if you have no knowledge about question or you doubt yourself, you would agree the previous students. It is called ‘’informational conformity’’

Market speculation is similar to conformity. When people heard any speculation they think that "others know something that I dont know. Probably they are right" This conformity behavior could cause sell or buy share

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