Economics & Finance

A Crisis of Beliefs: Investor Psychology and Financial Fragility

How beliefs shape financial markets and expose the economy to major risks


Mar 10, 2020
5.25 x 8 in.
20 b/w illus.
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The collapse of Lehman Brothers in September 2008 caught markets and regulators by surprise. Nicola Gennaioli and Andrei Shleifer walk readers through the unraveling of Lehman and the ensuing meltdown of the US financial system, and present new evidence to illustrate the destabilizing role played by the beliefs of home buyers, investors, and regulators. Using the latest research in psychology and behavioral economics, they present a new theory of belief formation that explains why the financial crisis came as such a shock to so many people—and how financial and economic instability persist. A Crisis of Beliefs is a must-read for anyone seeking to navigate today’s unpredictable financial waters.

Awards and Recognition

  • One of Bloomberg's Best Books of 2018 (Cass Sunstein)
  • One of Barron's Book Picks from Industry Leaders in 2018 (Robert Shiller)