Humans have a perplexing tendency to fear rare threats such as shark attacks while blithely ignoring far greater risks like unsafe sex and an unhealthy diet. Those illusions are not just silly—they make the world a more dangerous place. .
The global financial crisis that began in 2007 was not predicted by standard economic theory which assumes rational actors, efficient markets and equilibrium. Alternative explanations of economic behavior that are based on psychological regularities which are observed in human behavior were until recently relegated to the fringes of the discourse regarding economic phenomena. It will be argued that this has proven to have been a mistake.