This video by Intermittent Diversion gives a short explanation of herd psychology. Crowds and herds of people form when individuals are uncertain, and look to others for guidance. One person might be the first to choose a business or a stock, then one or two more might join them for companionship. Then the crowd snowballs as people think the first few know something special.

This model shows that leaders need a handful of companions to present the appearance of authority. If a business owner, hedge fund, or politician is savvy, they can plant influencers among the population to sell their propositions.