The Brain Science of Irrational Exuberance
As Andrew Lo of M.I.T. has demonstrated, if stock traders make a series of apparently good picks, the dopamine released into their brains creates a stupor that causes them to underperceive danger ahead.FYI, the new and growing field of neuroeconomics makes two appearances in the the latest edition of my favorite textbook. If you have a copy, check the index.
Update: More on the biological roots of the financial crisis.