Quoted from the Nobel web site : Traditionally economic research has relied on the assumption of people are capable of making rational decision. (Which many traders, including me, know is not always true.) This year Nobel Economic prize winner Kahneman has discovered how human judgment may take heuristic shortcuts that systematically depart from basic principles of probability. Real-world decision-makers frequently appear not to evaluate uncertain events according to the laws of probability; nor do they seem to make decisions according to the theory of expected-utility maximization. I think this is one reason why there are so many people losing money in trading.
adx, that is extremely interesting material. can you please post a link to the site you quote. thanks ! surf