Bandwagon effect is a psychological phenomenon whereby people do something primarily because other people are doing it, regardless of their own beliefs, which they may ignore or override. The bandwagon effect has wide implications, but is commonly seen in consumer behavior.
For example, people might buy a new electronic item because of its popularity, regardless of whether they need it, can afford it, or even really want it.
The value of products is not only determined by the utility that consumers derive from the products, attributes and their functional consequences, but it has an important social component as well. Specifically, scarce products are generally deemed valuable, independent of the utility that their intrinsic attributes deliver. This scarcity can be either due to insufficient supply or excessive demand of the product.
Scarcity related to excessive demand has distinct effects in the product valuation process. Consumers may extract information about the value of a product from the buying behavior of others. When consumers are unsure about the value of products, information on the valuation of others can help refine their own valuations.
In case of scarcity related to insufficient supply, where product exclusiveness leads to inferences of product quality (snob-effect). Consumers value the exclusivity of possessing rare products, and may see these products as a mean to emphasize their uniqueness. Being one of the few who own a particular product may increase the product utility.
(Reference: An extract from “How Product Scarcity Impacts on Choice: Snob and Bandwagon Effects”, a white paper authored by Herpen, E. van; Pieters, F.G.M.; Zeelenberg, M., 2005)