Presentation on theme: "BANDWAGON EFFECT. W HAT DOES BANDWAGON EFFECT MEAN ? The tendancy to do or believe things because many other people do or believe the same things. Generally."— Presentation transcript:
W HAT DOES BANDWAGON EFFECT MEAN ? The tendancy to do or believe things because many other people do or believe the same things. Generally it describes interaction of demand and preference in microeconomics.
WHEN BANDWAGON EFFECT OCCURS ? Bandwagon effect arises when peoples prefences for a commodity increases as the number of people buying them increases. People decide to ignore their personal information signals and follow the behavior of others.
The Bandwagon Effect disturbs the theory of supply and demand. The theory assumes that consumers make their choices based on a price and their own preferences, but according to the Bandwagon Effect people just follow the crowd.
AN EXAMPLE: FASHION ! When famous people wear different clothes, everyone just want to look like them all over the world. Sunglasses are the best example; They started the fashion and everyone on the streets are the followers !