Are Markets Driven by Emotion?

Originally aired in April 2010, the highly regarded PBS program Nova presented an episode titled “Mind Over Money” which explored the financial markets, our psychological barriers when making financial/economic decisions, and how irrational behavior helps explain dramatic financial mood swings (greed vs. fear and bubbles vs. crashes). The focus on the real estate bubble, the stock markets decline, and our own day-to-day financial decision making provides interesting insights into human behavior.

The episode presented some basic economic principals, but also exposed how, in reality, many “economic assumptions” about people acting in rational ways do not necessarily hold true.

With interviews from some of the world’s most prominent economic thinkers including Eugene Fama (Board Member of Dimensional Fund Advisors), Richard Thaler and Robert Shiller an in depth analysis is given that explores the debate between ‘Behaviorists’ and ‘Free Market’ economic points of view.

You can watch the episode on PBS’s website. Go to this web address: http://video.pbs.org/video/1479100777/