Support our online development, and advance our onground research initiatives in free market economics, as we seek to showcase the brightest Next-Gen minds.
THE ME-P DISCLAIMER: Posts, comments and opinions do not necessarily represent iMBA, Inc., but become our property after submission. Copyright © 2006 to-date. iMBA, Inc allows colleges, universities, medical and financial professionals and related clinics, hospitals and non-profit healthcare organizations to distribute our proprietary essays, photos, videos, audios and other documents; etc. However, please review copyright and usage information for each individual asset before submission to us, and/or placement on your publication or web site. Attestation references, citations and/or back-links are required. All other assets are property of the individual copyright holder.
INVESTING DEFINITION
By Dr. David Edward Marcinko MBA MEd
SPONSOR: http://www.MarcinkoAssociates.com
***
***
Social Proof is a subtle but powerful reality that having others agree with a decision one makes, gives that person more conviction in the decision, and having others disagree decreases one’s confidence in that decision.
This bias is even more exaggerated when the other parties providing the validating/questioning opinions are perceived to be experts in a relevant field, or are authority figures, like doctors, attorneys, financial advisors, teachers and/or people on television. In many ways, the short term moves in the stock market are the ultimate expression of social proof – the price of a stock one owns going up is proof that a lot of other people agree with the decision to buy, and a dropping stock price means a stock should be sold.
According to colleague Dan Ariely PhD, when these stressors become extreme, it is of paramount importance that all participants in the financial planning and investing process have a clear understanding of what the long-term goals are, and what processes are in place to monitor the progress towards these goals.
Without these mechanisms it is very hard to resist the enormous pressure to follow the crowd; think social media and related influences.
COMMENTS APPRECIATED
Subscribe Today!
***
***
Share this:
Filed under: "Ask-an-Advisor", Accounting, Ethics, Experts Invited, Financial Planning, Glossary Terms, iMBA, iMBA, Inc., Investing, LifeStyle, Marcinko Associates | Tagged: bias, Dan Ariely PhD, finance, financial advisor, iMBA, Influencers, Investing, Marcinko, personal-finance, social media, social proof, social proof bias, stock broker, stock market, stocks | Leave a comment »
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 