If 50 Million people say something foolish, it is still foolish…
You are on your way to a movie theatre and already 10 minutes late. At an intersection, you see two men fighting for small accident. Without even thinking about it, you will too slow your vehicle to check what the matter is. Why? Social proof.
In the movie at time of interval, you see bunch of people moving out of auditorium. You also rush out in hurry so you don’t have to wait in line at the snack counter. No matter how fast you leave, you will still reach back your seat just in time. Why? Social proof.
Social proof is the herd instinct. It is individual feel to behave same as other people. We are the direct descendants of those who copied others’ behaviour. This pattern is deeply rooted in us. The advertising industry benefits greatly from our weakness. Does a product become better because it’s most popular or it sells the most units? Be sceptical whenever a company claims like this.
Social Proof is largely visible in investment decisions. Earning better returns is always investors’ normal tendency. Whenever investment idea gains attention, it becomes suddenly appealing without any fundamental basis. Only experts can handle Investment in commodities like Wine, Coffee, paintings etc. But still large population finds such investment very attractive.
Take Virtual Currencies for example. It is biggest example of ‘Social Proof’. Suddenly we find very high interest from investors for crypto currencies. But my friend, where were you 2 years back? Time to invest in them was 2 years back. Now it is mega herd following a trend. Remember, If 50 Million people say something foolish, it is still foolish…
Nishit Siddharth Shah