Over the last ten years, the amount of research on behavioral finance — or BeFi — has exploded to the extent that anything said about the subject today seems almost trite.
To summarize: People are not perfectly rational economic machines when it comes to making financial decisions.
Now the fact that the decisions we make don’t match the mathematically optimal outcomes of traditional economic decision-making models isn’t a function of purely psychological factors. There are real physiological phenomena that occur that affect the decisions we make. The human nervous system is a complex network of cells that coordinates our actions using communication from sensory inputs from various parts of the body. This communication occurs directly through electrical synapses or via neurotransmitters.
More here – Institutional Investor
PS: I am surprised that anyone is still surprised that humans are not rational.
PPS: This article is a bit weird and it does seem to be rather tenuous.
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