When it comes to investment mistakes, we are often "predictably irrational."
- In classical economic theory,…human beings are believed to be rational entities…motivated by self-interest…who will pursue their desired ends…in an efficient and logical manner.…The name for this figurative human…is homo economicus.…Besides sounding super fun to hang out with at parties,…homo economicus probably doesn't even…sound like you, or most people you know.…That's because actual human financial behavior…is much messier, emotional,…and far more self-destructive…than classical economists would have predicted.…New fields of study have emerged…to explore and explain the behavior gap,…which is how real humans behave differently…from homo economicus.…
Behavioral economics, for example,…uses concepts and research models…from the field of psychology…and puts people into financial scenarios…to observe how they perform.…How can behavioral economics help you…be more savvy in your financial life?…Here are four rules to invest smarter.…First, know the difference…between your brain system one and system two.…These mental systems were outlined…
Updated
2/21/2019Released
4/3/2018Skill Level Intermediate
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Video: Behavioral economics: Invest smarter