Traders at a stock exchange notice that five traders on the floor seem to be selling more yen and purchasing more euros because of an expected decline in the yen. As a result, all other traders started to do the same. This is an example of the ________ that creates a self-fulfilling prophecy when the yen does decline in value.

Question

Quizplus · Accepted Answer

The bandwagon effect occurs when people do something primarily because others are doing it, regardless of their own beliefs, which can lead to a self-fulfilling prophecy as seen in the scenario described.

Traders at a Stock Exchange Notice That Five Traders on the Floor