Herding behaviour is referred to as the behaviour of an individual within the group that can act in a collective manner in the absence of centralized direction. This particular term can be referred to as the behaviour being followed by animals when in groups, fish schools, bird flocks, packs, demonstrations, general strikes and riots. Large trends in the market of stock often end and start with the duration of bubbles that are frenzied buying or crashes that are related to sale (Park 1991). It has been cited by a number of the over served that all of these episodes are clear evidence of having herding behaviour that is not rational and the main factor driving it is emotions. These include fear within the crashes and greed within the bubbles. A significant model related to herd behaviour can be analysed with respect to the market. The performance of work is known to be in relation with a minimum of two relevant strands related to literature (Morck1989). Based on this, it can be stated that there is no precise definition of herding behaviour due to the fact of being an extremely broad concept. In the most general sense, herding behaviour is referred to as the patterns of behaviour that are in correlation with other individuals. However, the concept of herding is known to result in systematic erroneous making of decision by the whole population.
Mimicry and imitation is known to be amongst the most basic instincts. The evidence for herding can be found within fads and fashion, just as same as the basic decision regarding how there must be the most appropriate commutation and what topic must be considered for research. Within the realm of finance, herding holds the potentiality of being universal. There is a significant requirement of mechanism with coordination when it comes to herding.