In his behavioral economics presentation, Paul Craven discusses how the mind and markets intersect. This psychological approach to investment considers humans to be irrational and emotional beings. Using several psychological experiments as examples, the speaker explains how correlations can be made between the two.
One such example is the bandwagon effect, which draws on the herd instinct. People copy what other people are doing for several reasons, such as there is strength in numbers, but many of them are not particularly rational. Where economics are concerned, this can result in market bubbles. Other behavioral biases in investment include the hindsight bias.
This behavioral economics presentation not only explores hardwired human bias, it also explains why they make 'mental shortcuts' in just about any field.