Abstract: “Present study was conducted to analyze human behavior during financial crisis of 21th century, which offers an alternative way to analyze economy and especially financial markets. The crisis was analyzed for the presence of psychological influence, including emotion, cognition and aspiration. Of the behavioral biases proofed, many were present during the bubble. However the most significant influences were shown to have been overconfidence, over-optimism, underestimation of risk and herding. The study shows that human behavior seems to be significantly biased in different way and thus causes the financial market to be biased as well. The article reveals that findings of behavioral finance may help to understand mistakes done by human and thus avoid disturbing the stability of financial markets.”

Keywords: human behavior, financial crises, biases