Disclosure statements, benchmarks, returns on investment, and financial trend charts appear to be rational tools for making rational choices. But are investors really so clinical and logical? Do we really know how to assess risk? Are our preferences stable? Do we behave in a consistent manner? Psychology tells us that investors, far from being cold-blooded analysts, are emotional subjects who display limited rationality. He or she cannot concentrate for long periods of time, cannot handle large amounts of information, cannot access infinite memory resources, and often has distorted recollections tainted by euphoria or regret. Thus it is essential - or so the authors of this book argue - for an investor to integrate his or her financial knowledge with information about cognitive processes. An inadequate financial education entails serious personal and systemic risk, as the sub-prime crisis and the ensuing world economic crisis have demonstrated all too well.

Riccardo Ferretti teaches Financial Intermediation Economics at the University of Modena and Reggio Emilia, where he also heads the Bank and Finance Study Centre (CEFIN).

Enrico Rubaltelli is a research fellow at the University of Padua's Developmental Psychology Department.

Rino Rumiati teaches General Psychology at the University of Padua.