Groupthink is a psychological manifestation where the individual’s viewpoints are set aside to favour the group’s objectives to achieve a common consensus. Groupthink creates a barrier to individual thinking and creativity as the members of the group avoid raising their opinions. The group members do not express their conclusions as they think their opinions would be misunderstood by others.
The concept of groupthink was introduced by American sociologist William A. Whyte, Jr. in 1958. Whyte’s idea of groupthink was that it is a phenomenon that promotes unrealistic and unjust decisions amongst a group. American research psychologist Irving Janis conducted further research on the concept of groupthink. Janis published two extensive studies regarding groupthink, Victims of Groupthink (1972) and Groupthink: Psychological Studies of Policy Decisions and Fiascoes (1982). Janis also explained the involvement of Groupthink in various historical events like the Vietnam War and the Pearl Harbor incident. Janis explained how these incidents happened just because of groupthink and how unpopular opinions were suppressed, which led to such disastrous incidents. Although the topic of groupthink is highly important, still very little research was conducted on the topic during the 1900s.
Groupthink behavior is widely spread and very common among teams. So to identify this, researchers found eight symptoms regarding groupthink behavior including rationalization, peer pressure, complacency, moral high ground, stereotyping, censorship and illusion of unanimity.
What is Groupthink?
Groupthink is a psychological phenomenon in which the group members reach a common consensus without discussion and evaluation of alternatives. Groupthink happens due to 3 main reasons including maintaining the harmony of the group, peer pressure and avoiding delays in decisions. Groupthink can also happen because of some other reasons like high stress and external threat. This phenomenon acts as a barrier to individual participation in a group discussion. Groupthink is widely spread across various levels, including corporate and geopolitical.
Groupthink is very dangerous at the political and international levels, as it would encourage decisions without proper assessment of risks and obstacles. Janis did enormous research on this and explained the involvement of Groupthink in various disastrous events like the invasion of Iraq and the Vietnam war.
What is the History of Groupthink?
The term “groupthink” was popularised by American psychologist Irving L. Janis as he did comprehensive research on the topic. Janis explained the existence of groupthink at various levels of governance. He even gave case studies explaining the involvement of Groupthink in historical events like the Bay of Pigs invasion, the Challenger space shuttle disaster and the Pearl Harbor attack. This word was given by William A. Whyte, in 1958, he derived the word from doublethink (acknowledging two contradicting opinions).
Irving Janis wrote two books on his observations of groupthink: Victims of Groupthink in 1972 and Groupthink: Psychological Studies of Policy Decisions and Fiascoes in 1982. As per Janis, the phenomenon of groupthink prevents individuals from raising opinions, so the group can make an unjust and unrealistic decision. He explained his observation with the example of Groupthink in the Bay of Pigs invasion that took place in 1961.
What are the 8 symptoms that causes groupthink?
To make Groupthink treatable researchers found traits to identify Groupthink at an early stage.
The eight characteristics of Groupthink as per Irving Janis, are:
The pressure of losing the image of being a loyal member of the group is one of the biggest symptoms. In general, groups are divided into two parts: one part of the group believes in the ideology of the group and another part has a different viewpoint. Groupthink creates pressure on the second part of the group to support the common ideology of the group in order to be treated as a loyal member of the group. This pressure cancels any attempt to explore different paths for a particular decision.
Each individual in the team considers himself responsible for the group’s decision. So everyone in the team tries to avoid any kind of immoral discussion, which makes it more difficult for individuals to participate in the discussion as no one wants to be the reason for an immoral conclusion.
Groupthink tries to avoid influence from any outside source. Because of this, any kind of criticism or suggestions from outside sources is not tolerated by the group. Even in case of any evidence, the team members are forced to believe that the decision presented is the most relevant. This makes the team members blindly follow the group’s decision.
Team members supporting the opinion of the group might argue with others criticizing the idea. They consider them morally weak and corrupt. This severely impacts the unity of the group and creates instability.
Groupthink creates resistance to criticizing groups’ decisions. which ultimately leads to a lack of opposition and alternate options available. Because of this, the team members are highly confident about the decisions taken by them. This creates an environment of overconfidence at the time of decision-making. Overconfidence acts as fuel for groupthink. This symptom promotes risk-taking without appropriate risk analysis.
Groupthink creates an uneasy situation for the team members. The team members try to resist any new opinions that would make them stand in opposition to the group’s decision. The team members also start to doubt their morals and beliefs. This kills the individual creativity of the team and makes them prey to groupthink.
7. The Illusion of Unanimity
The lack of opposition and questioning makes the team members fall into the illusion that everyone is satisfied with the group’s decision. This environment makes it more difficult for the members to raise their voices against an idea.
8. Mind Guards
Each team member feels that it’s their responsibility to protect the group’s opinions from external influence and the opposing members of the group. This restricts the group’s exposure to the external world.
How can groupthink affect the traders in the stock market?
Groupthink directly affects the traders in the stock market through news, tips, and suggestions from external sources. In today’s era, this flow of information has become much easier and faster because of social media. The decisions made by an individual are majorly controlled by the community’s decisions. The stock market these days has become much more volatile. The prices of stocks are determined by people’s interests, which can be influenced by news and rumors on social media.
The decisions of traders are influenced by friends, brokers and analysts, although many traders might believe their decisions are solely their own. These decisions made by traders might not always be fundamentally right; these decisions are based on groupthink. Whenever too many stock market traders run after a particular stock due to some kind of news, there is a high chance that they are going to sell it urgently in the event of bad news. This phenomenon is also known as the “hype cycle,” in which traders buy and sell shares by listening to community advice and tips. To avoid huge losses, one needs to do an analysis before buying or selling a stock.
What are the positive effects of groupthink behaviour?
The most important effect of Groupthink is that it makes stock markets somewhat predictable. Groupthink makes the process of decision-making fast and easy. Groupthink reduces the chances of alternate opinions by avoiding individual participation in the discussion. Because of this, all the team members are supporting a particular notion.
Groupthink also makes the process of decision-making less stressful as there is no part of the group opposing the idea. Group members try to impress each other by supporting their opinions.
Group harmony is maintained as they are all supporting the same opinion. There would be no rage or harsh conversations. This leads to a peaceful working environment where the team members can discuss the topic easily.
What are the negative effects of groupthink behaviour?
Decision-making reduces the quality of decisions. Groupthink can also make decisions wrong. A smaller number of arguments leads to unnecessary overconfidence, which leads to bad decisions without considering the risks and difficulties involved. A group will discard an opinion that does not align with the group’s decision, and all such unpopular opinions will be opposed. Groupthink reduces the creativity of the team members by not allowing them to freely express their opinions. This can also lead an individual to question their morality and belief.
What are examples of groupthink?
Janis even provided case studies illustrating how Groupthink affected historical events, following are some examples of such events:
- Pearl Harbor Attack: The American military was successful in capturing information regarding the attack on Pearl Harbor before the incident. Even after numerous warnings from the military, the naval officers decided not to respond to the warnings. Because of this, the Japanese military was successful in attacking the area, killing a couple of thousand US soldiers.
- The Explosion Of Challenger: One of the biggest companies in aerospace, Morton Thiokol, gave numerous warnings to NASA regarding a major fault in their space shuttle Challenger, but NASA rejected the warnings because of which the shuttle exploded, killing all the astronauts on board.
Is groupthink bad for the stock market?
Yes, groupthink in the stock market can lead all the members of the group to faulty decisions. The team members conclude without a proper discussion about alternatives. Such activities result in decisions without proper risk analysis. Groupthink creates a perception that the group’s decision is invincible. The group members lose their money in the stock market because of faulty decisions. The stock market requires well-thought-out decisions before investing. But groupthink has a high possibility of creating low-quality decisions.
An individual should have the courage to take decisions against the group if they feel so to avoid financial losses in the stock market.
Can you avoid groupthink?
Yes, we can avoid Groupthink. To avoid groupthink, we must eliminate the reasons why it happens.
The biggest reason for groupthink is when the group members are threatened by a particular individual or a part of the group. This threat can be of any kind, physical or mental. The team members fear raising their opinions and questioning the topic in a discussion because of this threat. Steps to increase harmony in the group should be promoted to avoid such issues.
The proper time for decision-making should be given in the case of faster decisions. A lot of aspects of the topic remain undiscussed. This is one of the reasons that fuel GroupThink, increasing the chances of wrong and faulty decisions.
What is the difference between groupthink and rational choice theory?
Groupthink is different from rational choice theory as it explains the decision-making process of a group instead of an individual. Rational choice theory is evaluated with the help of two elements (cost and reward), whereas groupthink has a lot of different variables involved, which makes it much more complex to evaluate practically.
The rational choice theory deals with how individuals make decisions to obtain maximum benefit from them. This involves thinking about various aspects of a decision, like opportunities, risks, and difficulties.
This theory is widely used in fields like economics, politics, sociology, and the treatment of addiction. This theory is based on the principle of cost and reward and explains how individuals make certain decisions by balancing both of these elements.
Faster decisions cannot be made with rational choice theory as it takes time to evaluate the risks and costs of a situation. On the other hand, for taking collective decisions, Groupthink provides a faster path to making decisions.