Page 78 - C:\Users\hp\Documents\Flip PDF Professional\2020 research project final report\

Furthermore, there is a massive weight of evidence of herd mentality bias in the

financial markets. You can think about the dotcom bubble. Many dotcom

companies did not have financially sound business models, but many investors

bought them because everyone else was buying into them. One of the things to

be very wary of is that one individual often finds it emotionally or psychologically

painful to go against the crowd. Think about a circumstance where a person stifled

his desire to do something because everyone else in his group voted to do

something else. Psychologists have found that it may cause physical pain for people

to be contrary to investors.

Thus, in the COVID-19 pandemic, most people do stockpile, social distancing, and

self-quarantine due to fear. As the majority do such activities, people tend to follow

them due to herd mentality.

Chapter 2: Societies action towards COVID-19 situation

The spread of the COVID-19 virus has resulted in unprecedented measures
restricting travel and activity participation in many countries. Social distancing,

reducing interaction between individuals to slow down the spread of the virus, has
become a new norm. Moreover, after the outbreak of COVID-19, people started to

do stockpiling.
According to Paul Marsden, a customer psychologist at the University of the

Arts, London said that people are buying things to manage their emotional state
by giving them a sense that they are “smart shoppers.” Furthermore, according to

Sander van der Linden, when people do not know what to do, they look at what

other people are doing. This is a part of the herd mentality. If they see others

stockpiling, it leads them to engage in the same behavior. As they see photos of

empty shelves, regardless of whether it is rational, it sends a signal to them that it

is the thing to do.

77