Kahneman's "rule of thumb" theory about the decision-making process is very helpful for studying that the stock market often rises and falls for no reason. His other behavioral economics theories also explain why people would rather drive tens of kilometers to buy cheap goods than buy more expensive goods nearby, although this will save some gasoline costs.

The field of behavioral decision-making where psychology and economics intersect can be said to have started in the late 1970s. The main representatives are two cognitive psychologists, Daniel Kahneman and amos tversky, and an economist, richard taylor. Since then, this research work has evolved into research achievements and strategies including sociology, law, biology, game theory, political science, anthropology and other disciplines, and has also had an impact on the above disciplines.

This research project deviates from the traditional rational actor model in two important aspects. First, it involves explicit knowledge. Because human cognitive ability is limited, we often evaluate different choices in a different way from the assumptions in the rational actor model. The "rule of thumb" or intuition we rely on is very effective in many cases, thus increasing the systematic deviation predicted from the rational actor model. Many people feel motivated to take different actions. For example, on the one hand, the traditional rational actor model predicts that decision makers should ignore sunk costs, but most people are actually affected by sunk costs. Secondly, it brings together richer explanations of human motivation. The rational actor model, in its most widely used form, assumes that individuals are only driven by narrow self-concern. It is expected that this kind of person's behavior is quite different from what we usually observe. For example, a typical "economic man" will not take part in the presidential election or tip the service after eating in a restaurant. However, millions of people vote regularly, and most people tip the service after eating in restaurants. We call the above examples with different motivation backgrounds "seemingly irrational but regretless behavior". 1979, Kahneman cooperated with amos tversky and put forward the "expectation theory". This theory is an important foundation of behavioral economics, which can better explain people's economic behavior. In contrast, they found that most investors are not standard financial investors, but behavioral investors, and their behaviors are not always rational and risk-averse. When the book value of the investment is lost, investors are more risk-averse, but when the book value of the investment is profitable, its satisfaction rate slows down with the increase of income. Expectation theory explains many abnormal phenomena in financial markets, such as Alai paradox and the mystery of stock premium.