Michelle Baddeley


On her book Copycats and Contrarians: Why We Follow Others... and When We Don't

Cover Interview of May 01, 2019

A close-up

Copycats and Contrarians has some chapters that will appeal to economists and experimental scientists, others that will appeal more to those interested in sociology, social psychology, and politics. The chapter on “Mavericks” stands out because mavericks have been neglected in the research literature; there has been much more analysis, at least in economic theory, of the copycats than the contrarians in our world.

For original scientific research, the chapter “Herding on the Brain” is the most interesting. Here I present some of my seminal research with Cambridge neuroscientists, including Professor Wolfram Schultz and his group, that explored some of the neural correlates of herding behavior. Wolfram Schultz is one of the pioneers in neuroeconomics – a relatively new subfield of economics which brings together economic insights with neuroscientific analysis. We used brain imaging techniques – specifically functional magnetic resonance imaging – to monitor our experimental participants’ neural responses while engaged in a stock-picking task.

For this experiment, our participants were given two pieces of information. First, some non-social information about a financial stock was presented in the form of a stock performance chart. Second, some social information about what other people had decided to do was also given to participants. Essentially, our participants were being asked either to stick with their own judgements based on the financial information that we’d given them, or, alternatively, to copy others’ decisions.

We found that most people, around 70%, copied others; this result is consistent with other experimental studies. The brain scans were more surprising; they showed some complex interplays of neural response. Copying others was associated with activations in areas of the brain usually associated with emotional processing. Copying others was also associated with activations in areas of the brain usually associated with higher level analytical reasoning.

From these experiments, it seems that herding reflects a complex interplay of reason and emotion. These findings connect with new insights into dual systems thinking, i.e. System 1 (emotional, automatic) versus System 2 (cognitive, deliberative), popularised by Nobel Prize-winning economic psychologist Daniel Kahneman in his 2011 book Thinking, Fast and Slow.