SOME PSYCHOLOGICAL CAUSES OF THE FINANCIAL CRISIS

Abstract

Besides the numerous effects that the financial crisis of 2007 has produced over the entire global economy, its onset has reopened fundamental discussions on the methodology of the economic science. One of the main controversies in the literature revolves around the nature of the neoclassical homo oeconomicus used in the mainstream analysis, with emphasis on the concept of rationality. Although the causes of the crisis are numerous, we propose to investigate in this paper only some aspects related to the psychological factors that contributed to the outbreak of this situation. The analysis is developed especially around the concept of economic rationality, arguing that the human being has a bounded rationality rather than a perfect one. Moreover, the relationship that exists between bounded rationality and the economic freedom of the individual is brought to the fore.

Keywords

• financial crisis
• bounded rationality
• behavioural economics
• liberalization