Some people may question my defining Deprival-Superreaction Tendency to include

reaction to profit barely missed, as in the well- documented responses of slot

machine players. However, I believe that I haven’t defined the tendency as

broadly as I should. My reason for suggesting an even broader definition is that

many Berkshire Hathaway shareholders I know never sell or give away a single

share after immense gains in market value have occurred. Some of this reaction

is caused by rational calculation, and some is, no doubt, attributable to some

combination of (1) reward superresponse, (2) “status quo bias” from

Inconsistency-Avoidance Tendency, and (3) “the endowment effect” from Excessive

Self-Regard Tendency. But I believe the single strongest irrational explanation

is a form of Deprival-Super- reaction Tendency. Many of these shareholders

simply can’t stand the idea of having their Berkshire Hathaway holdings smaller.

Partly they dislike facing what they consider an impairment of identity, but

mostly they fear missing out on future gains from stock sold or given away.

 

Fifteen: Social-Proof Tendency

 

The otherwise complex behavior of man is much simplified when he automatically

thinks and does what he observes to be thought and done around him. And such

followership often works fine. For instance, what simpler way could there be to

find out how to walk to a big football game in a strange city than by following

the flow of the crowd. For some such reason, man’s evolution left him with

Social-Proof Tendency, an automatic tendency to think and act as he sees others

around him thinking and acting.