The Asch Experiment – Studies of group conformity |

The Asch Experiment – Studies of group conformity

If you haven’t seen these videos, they are a must for students of psychology (which all investors should be). The first, is a study in conformity. After watching the video, some people’s initial reaction is that they guy is “an idiot”, “that would never be me”, etc. Contrary to these reactions, there have been numerous experiments that have all come out with the same conclusion: humans need for approval overpowers our common sense and logic.

The second video is the famous Milgram experiment. Again, instead of thinking you (the reader) is immune, you should instead recognize the universality of our cognitive dissonance. It can happen in multiple contexts, including investing and saving, where an authority encourages us to complete a task we disagree with. The people in the experiment are not inherently brutal or “bad” but rather, just like all of us.

[youtube=http://video.google.com/googleplayer.swf?docid=-2836209818734920853&hl=en&fs=true]

Scary stuff.

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