Financial markets favor herd mentality, amplifying risks and reducing diversity.
The article explores how people tend to follow the crowd when making stock market decisions, especially when they have different information. The researchers studied data from the Ho Chi Minh Stock Exchange in Vietnam and found that investors tend to follow others more during good days in the market than bad ones. They also discovered that herding decreased after a financial crisis. The study shows that intentional herding exists even when unintentional herding is taken into account, and different groups of investors interact in the market.