Herd mentality rules in financial crisis -experts

[David Farber <dave () FARBER NET>]

http://www.signonsandiego.com/news/science/20080930-0732-financial-psychology-.html

Experts Say Herd Mentality Rules in Financial Crisis
from the San Diego Union-Tribune (Registration Required)
WASHINGTON (Reuters)—Herd mentality rules during a financial crisis  
because people are wired to follow the crowd when times are uncertain,  
experts say.
Brain and behavior studies clearly show that when information is  
scarce and threats seem imminent, people often stop listening to their  
own logic and look to see what others are doing.
"People are afraid, and the reason they are afraid is there is  
tremendous uncertainty right now in the markets," Gregory Berns, a  
neuroeconomist at Emory University in Atlanta who studies the biology  
of economic behavior, said in a telephone interview. Berns puts people  
in magnetic resonance imaging or MRI scanners while he tests their  
responses to various scenarios, and studies patterns of their brain  
activation.



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