The halo effect is described as the tendency to believe that a good person who is good in behavior A is also good in behaviors B, C, and even D. It was named by psychologist Edward Thorndike in 1920. While studying how officers were assessing soldiers, he noticed that he had the tendency to assess them as totally good or totally bad. They didn't have gray areas such as “Good in this respect, but bad in that respect.”

Subsequent studies demonstrated a significant influence on the halo effect created by the first impression. Once we have a good impression at the outset, it becomes hard to let go of that conviction. Advertisers use actors in hero characters or beautiful actresses to promote products they have no expertise in. Since we feel good about that person, we also have a positive feeling about the under eye concealer, shampoo, or bank card he or she uses.

A 2002 article in the Harvard Business Review revealed that the halo effect plays a major role in business life as well. Senior executives fall for the halo effect trap when they assess candidates during an interview, making too much of some characteristics, while ignoring some others... The automotive industry is no different... Automotive companies use a best-selling model which they call the "halo vehicle" to sell the other models.

In his prize-winning book titled “the Halo Effect," Prof. Phil Rosenzweig explains that our perception of a company is also shaped by the halo effect.... We assume that a profitable company will have a sound strategy, a visionary CEO, and dynamic employees. When success is lost, strategies become faulty, the CEO is labeled incompetent and employees lazy...

In 2000, Fortune magazine praised Cisco's "determined customer focus," and then when the company hit the bottom in the stock market the following year, it said, "Cisco has a condescending attitude towards potential customers... Their conceited and brassy attitude is almost gullible!” What is interesting is that this is not just the view of outsiders. According to internal studies, executives in the company feel the same. In his comprehensive study, Rosenzweig claims that the halo effect also influences many of the renowned business books that examine accomplished companies and offer the secret to success.

Watch the Video