The conflict between psychology and economics

One of the underlying assumptions of economics is the idea of human rationality--that people will attempt to maximize their own well-being, or "utility." In contrast, some perspectives in psychology--most notably the psychoanalytic--have presumed the fundamental irrationality--the "psycho-logic" (as opposed to logic) of human beings.

The conflict between perspectives has eroded over the last 20 years as the new integrative field of behavioral economics (also known as behavioral finance) has developed. My goal in this blog will be to explore some of the ideas and concepts from both psychology and behavioral finance and to consider how understanding these can help people develop a higher level of financial well-being, or fiscal fitness.