With the recent explosion in behavioral finance and the shattering of our absolute trust of the efficient market hypothesis, Shiller explains Dodd-Frank and regulators in general is still lacking in recognizing our new understanding of the financial landscape.

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Men and women also think differently about recessions, says Matt Wallaert, behavioral psychologist and lead scientist at personal finance Web site Thrive.

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Justin Wolfers, assistant professor of business and public policy at the Wharton School at the University of Pennsylvania, where he teaches "Finance, Behavioral Economics and Sports Betting, " says he's very optimistic about betting in office pools.

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Kahneman, often working with a fellow academic, the late Amos Tversky, described many of the core concepts of behavioral finance, including: loss and regret aversion, representativeness, anchoring and adjustment, and availability bias.

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There have been no behavioral finance studies that found a plausible relationship between longer time horizons and less emotional stress during bear markets.

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And there is a lot of very interesting stuff that's been done with behavioral finance.

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Behavioral finance also plays a big role in the returns people earn, and the book has two chapters on this topic.

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While Markowitz and other PhDs in Economics may fit that description, most investors do not (see behavioral finance).

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