When in Doubt, Copy | The MIT Press Reader
From infancy, we learn by copying others. It’s also how we navigate uncertainty throughout our lives. As the Delta variant of Covid-19 surges, for example, you may have seen an uptick of people wearing masks again at your grocery store, even when it’s not required. If this caused you to start wearing yours again, you’ve likely reduced your risk of hospitalization with no more thought than “I’ll do what she’s doing.” But such copying is a double-edged sword. You may be in a community where most people do the opposite, so you’re copying behavior that increases your risk.
The same goes for buying recent “meme” stocks — is GameStop stock a good bet? Sure, until it isn’t. You may recall in 2008, CNBC stock market analyst Jim Cramer shouted his infamous recommendation into the TV camera: “No, no, no! Bear Stearns is fine! Don’t move your money from Bear!” Soon afterward, Bear Stearns went belly up. A lot of people made fun of Cramer, including Cramer himself, who apologized profusely to his (former) fans who lost millions.
Cramer endured a period as a great piñata, and the Bear Stearns prediction was quite a gaffe, but that particular one was cherry-picked from the total number of predictions he ever made. What about all the ones that didn’t turn out so bad?
