Obedience to Authority

Obedience to authority in a financial context means following expert advice even when the data or our views say otherwise. We therefore trust the expert’s status as a substitute for our own, independent evaluation.

NoteExample

Expert endorsement

An financial commentator suggests investing in crypto. However, their recommendation might (a) also be biased, whether they realise it (e.g. sponsored by a betting platform) or not (simply carried away by the ongoing trend) (b) be mistaken, either by lack of true expertise or simply because crypto markets are hard to predict.

“Sounds like a real expert, this guy”.

Also relates to: Social Contagion · Communal Reinforcement · Availability Cascades · Confirmation Bias