Can we find explanations for financial crises related to 'herd behavior' in animal ethology?

Of course, and understanding the "herd mentality" and financial crises from an ethological perspective will be much more intuitive than looking at a bunch of complex economic charts.

Let's talk about sheep first, real sheep

Imagine a large flock of sheep on the prairie. Why do they always huddle together?

This is actually a very clever survival strategy, hardwired into their genes.

Security, Diluting Risk: A lone sheep has a 100% chance of being targeted by a wolf. But if it's in a flock of 1000 sheep, its chance of being eaten instantly drops to 0.1%. So, sticking with the main group means safety.
Information Sharing, Cost Saving: It's too exhausting for every sheep to constantly scan 360 degrees for wolves. The most efficient way is that as soon as one sheep spots danger and starts running, the others don't need to see the wolf themselves; they just follow. If they run in the wrong direction, at most they waste a bit of energy; if they don't run, they might lose their lives.

Therefore, in the animal kingdom, "following the crowd" is a low-cost, high-reward survival rule. Most of the time, it's correct and rational.

Now, let's replace the prairie with the stock market

Investors in the stock market are like sheep on the prairie. And the "wolf" is the risk of loss.

What does an ordinary retail investor feel when faced with massive company financial reports, complex macroeconomic data, and a flood of true and false information? It's incomplete information and uncertainty. They are like a sheep with limited vision, completely unaware of where on the prairie is safe or dangerous.

So what should they do? The most "rational" choice is to see what other sheep are doing.

Where are the "smart sheep" going?: They will observe what the so-called "stock gurus," large institutions, and analysts are buying or recommending. They'll think: "They're so professional, they have more information than I do, so it must be right to follow them."
Where are "most sheep" running?: When they see a certain stock (like Tesla or Kweichow Moutai in previous years) soaring, and thousands of people are discussing and buying it, they develop a sense of "fear of missing out" (FOMO). This is like a flock of sheep seeing their companions running in one direction; they instinctively follow, afraid of missing out on good pasture or being left alone to face danger.

How do financial crises happen? — The flock runs towards the cliff

This "following the crowd" behavior creates a massive positive feedback loop in financial markets, ultimately leading to disaster.

Formation of a Bubble (Everyone Rushes In) Initially, a certain asset (like houses, stocks, or tulips) might indeed have value, and a few "leading sheep" start buying. The price rises, attracting more followers. Then the price continues to rise, attracting even more sheep... At this point, the reason for buying is no longer "how much this thing is worth," but "I believe it will be more expensive tomorrow because more people will buy it." The asset's price becomes severely detached from its true value, and a huge bubble inflates. This is like the entire flock stampeding in one direction; no one thinks about why they're running, they just know that following means getting food.
Crisis Eruption (Everyone Jumps) Suddenly, the "leading sheep" at the front realize something is wrong (perhaps sensing risk, or simply having made enough profit and wanting to exit); they start turning back or quietly selling. This signal spreads rapidly like dominoes. When the sheep behind see those in front selling, their first reaction isn't to analyze "why they're selling," but "panic." They think: "If I'm too slow, I'll be stuck at the top!" Consequently, everyone starts selling at any cost. The panic in selling is as intense as the frenzy in buying. The result is a stampede. Prices collapse instantly, the market plummets, and a financial crisis erupts. The entire flock, in a state of panic, collectively rushes off a cliff.

To summarize

So, from an ethological perspective, the "herd mentality" in financial crises isn't because investors are "foolish." On the contrary, it stems from a "rational" strategy adopted by individuals with insufficient information, aiming for survival (avoiding losses, gaining profits).

However, this survival instinct, proven effective over tens of thousands of years of evolution, can create disastrous "resonance" in modern finance—a highly complex, rapidly changing system full of "false signals."

Simply put, our brains and behavioral patterns are still those of primitive humans who chose to "follow the crowd" for survival on the prairie, but what we face is a financial jungle billions of times more complex than any prairie. This is one of the fundamental explanations for many financial crises.