Importance of trust and panic emotions for crisis and speculations from behavioral economics perspective

One of the main reasons Traditional Economics Theory to fail to explain various crisis and speculations throughout history is disregarding the connection between human emotions and social networks. For an in-depth understanding of the crisis and speculations and to minimize their effects, the trust and panic emotions underlying the investment behaviors of the individuals should be considered. The field of Behavioral Economics is advancing every day to find answers to depressions and provide recommendations to prevent possible future depressions. In this thesis, the first section explains the history and theories of Behavioral Economics; the second section investigates the historical depressions and speculations from a panic and trust perspective and the third section consists of an experiment questionnaire to understand the effect of trust and panic emotions on investment decisions. The experiment questionnaire is applied on 438 individuals and the results are attenuated according to the theories in Behavioral Economics. The purpose of the experiment questionnaire results and comments is to introduce a different perspective to the crisis and depressions.