Happiness causes over-optimism which causes over-trading. Repeat until crash occurs.Optimistic Fools People who are happy are more confident and expect to make more money by trading, and anticipate taking lower risks in doing so. This result ought to be enough to depress most people, but most people are optimistic and don’t depress easily. This is especially true if they make money on their random trades, because that makes them happier, more optimistic and more prone to trading. Even better, over-optimistic people are more socially popular and therefore more likely to be imitated....

107 Ways of Being Wrong As we’ve seen in The Big List of Behavioral Biases, there are 101 (well, 107 at the time of writing) ways in which people exhibit irrational biases. The basic idea, that we’re affected by these biases in predictable ways, is now well accepted. The problem is that there are simply too many biases for this to be the be-all and end-all of the explanation of market irrationality. So while the basic concepts of behavioral finance are understood, in the sense that irrationality is a driving force of market misbehavior, the underlying mechanisms by which they operate are...

Married CEOs and fund managers take less risks than single ones Sex and CEOs Sexual selection – the competition for mates – lies at the heart of Charles Darwin’s theory of natural selection. All things being equal – which they never are, of course – any behavior or attribute which makes an individual more attractive to breeding partners should end up being selected for because the unsuccessful individuals in the mating game leave no offspring. Given the biological imperative to pass on their genes you’d expect people to fairly aggressive in trying to do so. The evidence suggests that...