Behavioral economics and approaches for 2008 global financial crisis

Explaining of the financial crisis boomed in United States in mid of 2007 and influenced all over the world in 2008 and 2009 is considerably hard by the frame offormer crisis theories. Classical economics? rationality assumption, homoeconomicus and institutional mechanism which are built by `?laissez faire, laissez passe?? insights was inadequate to understand the crisis process.Behavioral economics which presumes that individuals? decision making process is determined with bounded rationality, is been noticed in 2008 global financial crisis by its approaches. Behavioral economics identifies the decision making process by emprical frame and evaluates the process as an individual process depending on cognitive abilities instead of rational calculating. It also identifies the individual who interacts with institutions in social environment unifying psychology and economics. Hence, behavioral economics accounts for the global crisis by individual decision making under uncertainty and contributes the literature by the way which is suitable for the two disciplines normatively.On the other side classic economics assumes that individual has perfect information, accordingly he knows the outcomes of his decision in the future. Pratically, individual who deviates from rational assumptions, decides by weighting his prospects in cognitive process.In this research,it has been observed that the scope of global financial crisis has changed by becoming vague of the environment that individiual and institutions interacts neither the banking crisis nor the financial crisis, the global crisis is changing into confidence crisis. In this situation, individual and institution?s behaviors must be explained by psychological frame adding of the economic frame. In this research, 2008 global crisis is lighten by Prospect Theory, which explains the decision making under uncertainty. At the finance sector, where the information is special and heterogen, any information or sign is overvalued contrary to Bayesian calculation and then investor makes wrong decide. Again, investor who predicts to rise in stocks, ignores the signals which are adverse. Thus, the ballons which have not real mutual.After the booming, the remaining is uncertainty. The aim of the research is to explain the crisis process realistically by the inductive method of behavioral economics.