The Strong Pull of Groups Can Lead to Disaster. How Do You Break Away?

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I recently read a great article on an avalanche that killed three people in Washington state.  As a social psychologist I found the group dynamics very telling.  As individuals, it is doubtful that any of these people would have made the same set of decisions that had them skiing in the back country that day.  Here is the outline of what happened from the article:

A group of 16 experienced back country skiers made a decision to ski the day after a huge snow fall occurred.

There was an avalanche caused by these skiers that killed 3 of them.

There were several points of danger that experienced skiers would be aware of and in fact several of the survivors thought about before the tragedy.

Despite this, all 16 made the decision to ski that day.

Signs of Danger

The area had just gotten a large dump of snow after several weeks without snow. This is the first point of danger.  Large amounts of new snowfall on top of thin layers of old snow is generally thought of as creating an avalanche danger.  That morning several of the survivors listened to the snow report that said that the avalanche danger was high, a 4 out of 5 for the area they were to ski.

This wasn’t just any group of skiers, but was the elite at Steven’s Point along with an ESPN ski reporter, a professional skier, the freestyle skiing head judge, etc.  In short, there was celebrity status adding on to the forces that were pushing forward.  Now everyone knows that the more skiers you have in your party the more the avalanche potential increases.  Each skier moves snow around that could be the breaking point, but adding skiers not only doubles your chances but ups it exponentially. 16 skiers in one group is just crazy.

And that is exactly what some of the party thought as they waited for the assigned time to ascend.  But that didn’t cause any to back out.  Group dynamics were at work here.  No one wanted to be seen as the person to rain on the parade that day.  Not in front of such an impressively credentialed group.  So here they were, all experienced back country skiers, knowing their was a high probability of avalanche, knowing that skiing in a party of 16 in the back country was wrong.

Once they hiked over to the ridge, there were obvious signs of unstable snow.  But still no one thought to back out now.  Finally, there was one more fatal error. There were two lines down, one straight down and the other to the left.  It was common knowledge that the line straight down was more dangerous and in fact historically skiers had been caught in avalanches often along that line. The first couple skiers were local and they went straight down.  Another group of 3 went to the left.  Those folks remember thinking that those that chose to go straight down were making a mistake.  The majority followed the line straight down but stopped shortly.  Then they saw it, the snow give way in front of them, dropped out of view.  The group that went left got to the bottom and had no idea what had happened until they say a pole sticking out of the snow in front of them.  They activated their finding beacons and started digging.  They saved one out of the 4 that had been caught in the avalanche.

Group Decisions Don’t Always Make Smart Decisions

We like to think we make decisions as individuals, but we don’t.  We are always making group decisions in some way or form.  The power of the group to bring us along and cause us to disregard warning signals is very strong.  Interestingly, the most confident and the least confident are strongly effected by the pull of the group.  The most confident because they can’t imagine themselves making a mistake they can’t get out of and the least confident because they feel there is power in being in the majority.

The most recent real estate valuation bubbles are evidence of this as were the stock market bubbles of the last decade.

What intrigued me was those three skiers that went to the left, the safer line.  How had they made that decision?  How had they broke from the leadership of the group that was leading them to disaster?  I see those three skiers as similar to those who break away from the mutual fund industry.

I am very interested in what brought you to be able to break away from the group and start investing in real estate?

Can you tell me some of your stories?

Photo: shesnuckinfuts

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1 Comment

  1. Great and thoughtful post, thank you.

    I would argue that, for me at least, a solid and structured understanding of my motives and goals is the general guideline. If I know what I’m comfortable with (real estate), why (long term endeavor, less prone to volatile and short-term bull/bear stampeding due to non-liquidity, can provide physical shelter in rainy days, etc), and where (Japan, due to superb cashflow, a stable and reliable/honest business environment, and a host of other, more personal reasons) – no amount of social pressure can steer me off course.

    If, on the other hand, I was unsure of my goals and the reasons behind them, with guidelines as amorphous as “I want to achieve financial freedom” or “I want to make fast money” or even “I want to be where ‘it’s at'”, I believe sticking to my guns would be much harder.

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