Halo Effect: Are you influenced?

If a certain person “X” is good at A, it is believed that he will also be good at doing B, C and D. Similarly, if that person is bad at A ,it is assumed that he’ll be bad at doing B, C and D.

Halo effect is the phenomenon whereby we assume a positive or negative opinion about a person based on an impression formed from performance in one area. It suggests that we are highly influenced by first impressions.

HOW? YOU ASK.
1. If you happen to see “X” first in a good light, it is difficult to subsequently darken that light!
2. An actor’s entire potential for acting might be judged on the basis of a single performance done by him/her.

This term, coined by a psychologist Edward Thorndike, was to describe the way commanding officers rated their soldiers. He discovered that there was a little mixing of traits officers usually distinguished soldiers as being completely bad or completely good; few soldiers were said to be good in one respect but bad in another!

HOW DOES IT WORK IN ECONOMY?

Advertisers pay in crores and lakhs to famous actors and actresses for endorsements deals to promote their respective products (about which the actor/actor will certainly have no expertise in!) It’s a psychological thinking that since an actor played a heroic role or an actress was extremely beautiful in some movie
(because actresses always have to look good, no matter what!), people assume the quality to be good and believe in the product they are promoting.

HALO THEORY APPLIED TO BRAND EVALUATION

Ideally, an individual should be able to evaluate each feature a given branded product prudently and should have no problem in rating the good features high and bad features low. However, in practice, researchers have noticed that people give a high rating to all the features of the branded product, given that they like the brand. Similarly, they will rate low all the features if they don’t like the brand!
This effect makes it difficult to evaluate brands in terms of their strength and weaknesses. However, if a brand name has a good reputation in the market place, the halo effect may work to brand’s advantage!
For the same reason, any random iProduct launched by Apple will be assumed to be the “best” in quality.

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