Tell me more about halo effect

The halo effect is a cognitive bias where an observer's overall impression of a person, company, brand, or product influences their feelings and thoughts about that entity's character or properties. It was named by psychologist Edward Thorndike, it's essentially the idea that our overall impression of a person (he's nice!) impacts our evaluations of that person's specific traits (he's probably smart, too!).

In business, the halo effect is often used in marketing to influence customers' perceptions of a product or brand based on favourable direct experiences or associations. For example, a customer might perceive the products of a well-known brand to be of high quality due to their positive experiences with other products from the same brand.

However, the halo effect can also lead to errors in judgement, such as overestimating a company's financial performance based on a single successful product.