Posts Tagged ‘Cynicism’

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You may have heard of Solomon Asch. He was the psychologist who helped to introduce us to the idea of group compliance. In his famous experiment, subjects were handed two pieces of paper. On one was drawn a line; on the other three lines. One of the lines on the second sheet was the same length as the line on the first; the other two lines were obviously different.

Subjects were asked to identify which line on the second sheet was the same length as the line on the first. It was an easy test, and nearly all subjects got it right.

Then he played a trick on them. Subjects were put into a group situation. Unknown to them, the rest of the group were actors, and each actor deliberately pointed to the wrong line. It is not hard to imagine how the subjects reacted; their sense of panic or of self-doubt. In fact, in the original Asch experiment no less 74 per cent of those who took part complied with the group, getting the obvious right answer wrong on at least one occasion.

The Asch experiment illustrates how bubbles, even wars, can occur, as individuals comply with the crowd. It is interesting to note, however, that if one actor goes against the rest, and guesses correctly – or perhaps wrongly but with a different wrong answer from everyone else – the subject was far more likely to go against the crowd. It does not take much to break crowd compliance.

The Asch experiment has been repeated worldwide, and it was found that group compliance tended to be slightly higher in countries seen as having a more cooperative and less individualistic culture, such as China. Now don’t over-egg this one. The difference is not that great, but it does go to show that – contrary to what some argue when they say China is different – there are reasons to think China is just as susceptible to bubbles as the rest of us.

© Investment & Business News 2013