Halo effects are psychological tendencies studied in some detail by the field of cognitive psychology. They occur when one good quality about a person, say, they're a fan of the same sports team - leads us to over-attribute good qualities to them in other areas. In a school context, students that get an "A" on the first piece of homework they turn in might end up getting undue slack from a teacher on further grading, because the teacher expects them to continue producing A-quality work. The inverse of the halo effect is the "devil effect" or the "horns effect," where one instance of bad performance causes the victim to be attributed negatively in an unfair fashion in the future.
The halo effect is a cognitive bias, one among hundreds, a "mental shortcut" or even "cognitive illusion" that causes people to behave in ways that an unbiased observer empirically and systematically considers unjustified. Because our entire lives are permeated by these cognitive judgments, studies of biases like the halo effect go down to the very fabric that underlies our society.
In one famous study, commanding officers were asked to rate their soldiers on an array of traits, both good and bad. Analysis of the results showed that positive and negative qualities were strongly correlated with one another. This shows that people tend to paint others with a broad brush - "good in general" or "bad in general." These attributions are made early, sometimes in the first few seconds of meeting someone (hence the piece of wisdom that says first impressions are so important), creating anchoring effects days, weeks, or even years after the fact. Halo effects are a serious problem in recruiting for Human Resources departments, where studies have shown time and time again that past behavior is a way better predictor of future behavior that interviewer impressions.
In professional auto shows, halo cars are super-nice cars that are put on display so that the awe elicited by them leaks over into the whole show. We see this effect not just in car shows but in organizations, museums, universities, governments, and so on. The province of Alberta, in Canada, has even gone so far as to pay leading scientists $20 million US Dollars (USD) to move to their area and perform research there for the next 10 years. Clearly not all of these scientists will produce results for the province worth over $20 million USD, so the only alternative explanation is that government officials are trying to produce a halo effect around their province and cities, to attract promising young researchers.
The halo effect is deep and omnipresent. Every one of us likely falls prey to it everyday. Examine your own thought processes consciously, and you'll see that halo effects permeate practically every judgment you make - including your judgment of the quality of this website and the humble author of this article.