Firstly, the Bystander Effect is caused by pluralistic ignorance, a form of misinformed information processing. Bystanders try to figure out how to interpret ambiguous events by looking at the reactions of others. When others don't do anything, they assume that there is nothing to worry about, and that taking action is unnecessary. For instance, if a person is lying motionless on a park bench, but nobody reacts to it, bystanders could assume the person is drunk or sleeping. However, this tactic of looking for social proof of what is going on assumes that others know more than the person him/herself, while actually, everyone may be uncertain. Pluralistic ignorance leads to collective inaction in case of ambiguous events.
Secondly, when the event is interpreted as critical (so the person knows intervention is needed), diffusion of responsibility takes place when multiple people are present. This means that it is unclear who should be responsible for taking action. For instance, if the motionless person on the bench is bleeding, and just one person walks by, it is clear to this person that he/she should provide help and make a call. However, if the same happens in a busy park full of joggers and people letting out their dogs, responsibility is distributed among all these potential actors. Each person can view others as better able to handle the situation and therefore more responsible, or assume someone has called an ambulance already or is about to do this. Therefore, diffusion of responsibility can lead to collective inaction too.