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Definition of 'Groupthink'

Groupthink is a psychological phenomenon that occurs when a group of people are so focused on reaching a consensus that they ignore dissenting opinions and critical thinking. This can lead to poor decision-making and can be dangerous in business and financial settings.

There are a number of factors that can contribute to groupthink, including:

* A strong leader who discourages dissent
* A lack of diversity in the group
* A high degree of cohesiveness among group members
* A stressful or time-sensitive environment

When these factors are present, it can be difficult for group members to think critically and to challenge the group's assumptions. As a result, the group may make decisions that are not in its best interests.

There are a number of things that can be done to prevent groupthink, including:

* Encouraging dissent and critical thinking
* Promoting diversity in the group
* Creating a non-threatening environment
* Setting aside time for reflection

By taking these steps, it is possible to reduce the risk of groupthink and make better decisions.

Groupthink can have a number of negative consequences for businesses and financial institutions. These include:

* Poor decision-making
* Missed opportunities
* Increased risk
* Damage to reputation

In some cases, groupthink can even lead to financial collapse. For example, the 2008 financial crisis was partly caused by groupthink among bankers and regulators.

It is important to be aware of the dangers of groupthink and to take steps to prevent it from occurring. By doing so, businesses and financial institutions can make better decisions and avoid costly mistakes.

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