The Financial Crisis - Lessons for Europe from Psychology (2011:1)


In the aftermath of the financial crisis, a vast amount of economic analysis and a sizeable number of reforms in the financial markets have followed. In this report, Professor Henry Montgomery takes the analysis one step further by examining the psychological explanations behind the crisis. The author explores the cognitive bias behind decision making by economic professionals and lay persons on the financial markets. The report also discusses how psychological knowledge can constitute a basis for reforms in order to safeguard sound economic development in the future.

The report is part of the research project Long-term Effects of the Economic Crisis and was presented at the seminar Europa och finanskrisen - lärdomar från psykologin.

Henry Montgomery is Professor of Cognitive Psychology at Stockholm University.