'Everyone does it' is a risky strategy

Charles Munger, partner of Warren Buffett and an extremely smart and wise man, talks a lot about avoiding a trap called "social proof". We, as humans, are extremely prone to this psychological phenomenon. "Social proof" drives us to do what others are doing, consciously and unconsciously. This is why a crowd behaves in a similar way. If the people in the crowd are emotionally connected to us (family, friends, peers), then the social proof is even stronger.

This article was originally published on December 28, 2016.