The Bandwagon Effect: Impact on Markets and Elections

What is this page about?

An explainer of the bandwagon effect focused on its impact on markets and elections, opening with the 2021 GameStop surge where retail investors bought largely because others were. It covers the term's origin, the Asch experiments and the Bikhchandani, Hirshleifer, and Welch informational-cascade model, and the psychology behind herd behavior, then works through cascade effects in financial markets (asset bubbles, the dot-com bubble, bank runs, institutional herding) and in politics (the spiral of silence, endorsements and momentum), how to resist it, and the line between bandwagon and wisdom of crowds.

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1. 11 July 2026 · corrected by Emir Baycan

   3 corrections applied: O'Rourke did not withdraw in this window; he had ended his campaign in Nov 2019 and only endorsed Biden on March 2, 2020. | South Sea shares rose from about £128 to roughly £1,000 in 1720, an increase of roughly 700-800%, not 1,000%. | The mid-century voting-influence work paired with Lazarsfeld is by Elihu Katz (Personal Influence, 1955), not Daniel/'Dan' Katz.

   Before

   Pete Buttigieg, Amy Klobuchar, and Beto O'Rourke all withdrew from the race; Share price rose 1,000% in months; Dan Katz and Paul Lazarsfeld studied bandwagon effects in voting

   After

   Pete Buttigieg and Amy Klobuchar withdrew from the race and endorsed Biden, while Beto O'Rourke (who had ended his own campaign months earlier) endorsed separately; Share price rose roughly 700-800% in months; Elihu Katz and Paul Lazarsfeld studied bandwagon effects in voting

   Why: O'Rourke had already ended his campaign in November 2019 and only endorsed Biden in March 2020, not as part of the Buttigieg/Klobuchar withdrawal window; the South Sea Bubble share price rose roughly 700-800 percent, not 1,000 percent; the mid-century voting-influence researcher paired with Lazarsfeld was Elihu Katz, not Dan/Daniel Katz.

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