5 Books That Explain Investor Psychology

Gain a better understanding of how your brain works when you make financial decisions.

The most remarkable breakthrough in personal finance in the past 20 years is identifying the reasons we are so poorly programmed for investing. Interest in the fields of behavioral finance, investor psychology and neuroeconomics (how the brain works when we make financial decisions) is exploding -- as is the number of books on those subjects. Here’s a selection of my favorites.

Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism, by George A. Akerlof and Robert J. Shiller (Princeton University Press, 2009; $25 for hardcover).

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Bob Frick
Senior Editor, Kiplinger's Personal Finance