PROJECT M
 

Behavioral Finance 2.0

Early behavioral finance studied the way people arrive at financial decisions and then tended to smile. This wasn’t malicious. Anyone who spends any length of time around people cannot help but be amazed at our foibles and quirks. The good news is that behavioral finance has moved well beyond amusement, and is now turning our behavioral challenges into behavioral solutions

Shlomo Benartzi
© Panos Pictures

Behavioral Finance 2.0

Early behavioral finance studied the way people arrive at financial decisions and then tended to smile. This wasn’t malicious. Anyone who spends any length of time around people cannot help but be amazed at our foibles and quirks. The good news is that behavioral finance has moved well beyond amusement, and is now turning our behavioral challenges into behavioral solutions

Shlomo Benartzi

Amos Tversky

Kahneman and his long-time colleague Amos Tversky, a mathematical psychologist, did much of the important work that underpins behavioral economics, including developing prospect theory, which aims to explain irrational human economic choices. Nobel Prizes are rarely awarded posthumously. Kahneman, who received his Nobel Prize in Economics six years after the death of Tversky, told The New York Times (November 2002): “I feel it is a joint prize. We were twinned for more than a decade.”

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