Behavioral Finance: Playing Mind Games
There’s no denying the popularity of behavioral finance, the study of the way psychology influences decision making. Policymakers, investors and businesses have all embraced the idea that humans need help overcoming their own biases and irrationalities. The challenge is implementing these concepts in a way that actually improves people's financial lives.
Behavioral finance is a breakout star of the post-2008 economic world. A little-known academic discipline a mere decade ago, this combination of psychology and finance now serves as a catchall explanation for why we act against our own financial best interests time and time again.