Herding Asymmetry and the Entropy-Amplification Mechanism: Global Evidence and Cross-Asset Applications

Herding behavior exhibits pronounced asymmetry across bull and bear markets, a stylized fact widely documented in global financial markets. Existing behavioral finance and econophysics theories explain this phenomenon from individual psychology and partial group interaction, yet fail to provide a unified mechanism accounting for its systemic nature and cross-market variation. This paper documents a robust empirical pattern: market entropy—proxied by realized price volatility—significantly amplifies herding intensity, and this amplifying effect is approximately 57% stronger in bear markets than in bull markets. Institutional ownership attenuates this effect. These findings are derived from daily trading data spanning 20 global markets from 2010 to 2026, using the CSAD herding measure and panel regressions with interaction terms. The results remain stable across alternative specifications, subsamples, and endogeneity-mitigating tests. To reconcile micro behavioral mechanisms and cross-market herding patterns under a unified systemic rule, we provisionally term the underlying framework the Fundamental Consciousness Energy (FCE) hypothesis. This study complements existing behavioral finance theories by providing a unified empirical account of herding asymmetry and its cross-market heterogeneity. We further translate these empirical findings into actionable allocation and risk control frameworks for sovereign wealth funds, global macro hedge funds, and cross-border regulatory authorities.