Continuing off yesterday’s post on heuristics.
There are ways heuristics help us. As we mentioned yesterday, using mental shortcuts eliminates the mental overhead in processing every single minute detail and decision in our life. There are times, however, where these shortcuts lead us astray.
Take the example given yesterday. As we leave the building, we follow everyone else out the exit door. This is an example of a mental heuristic called ’social proof.’ This behavior is perfectly reasonable and thousands of people use this shortcut each day. But sometimes it leads us down a terrible path.
Social proof is discussed extensively in the book:
Influence: The Psychology of Persuasion (Collins Business Essentials)
Riots and violent outbreaks often contain elements of social proof. In the beginning, there is mostly yelling. More people show up and the level of interaction increases. People start getting angry, waving their arms, and shaking their fists. Soon, everyone is yelling, complaining, and acting with threatening behavior. A frenzy starts in the crowd. As soon as the first person makes a single violent move, the stage is set and the remaining group acts in a similar manner. Normal, sane, calm individuals start destroying things. All because of social proof.
Financial bubbles are another example of social proof gone wild. Buying a stock causes the prices to rise, which cause more buying, which causes the prices to rise, etc.
From an evolutionary standpoint, this behavior has it’s roots in survival. In both nomadic and stationary tribes, it made sense to makes decisions based on the group’s needs. Survival then was completely different than today. Things were dangerous then. You had a greater chance of staying alive if you followed the group then if you decided to make your own decisions. So we learned to follow the crowd.
Does social proof serve us now? Yes, of course it does. It help us through the day. Only in rare circumstances do these things get out of control.
We’ll discuss another particularly nasty heuristic about pricing next.