Introduction: behavioral and evolutionary finance

Abstract

Once upon a time there was a planet Π on which there was a financial market M. All the inhabitants of Π were participants in the market M. They traded stock, equity, derivative securities and other assets. They were heterogeneous and diverse. However, they all had a common feature. They all maximized expected utilities of their consumption subject to budget constraints. They were infinitely wise (or in the local language, fully rational), they had unlimited memory and computational possibilities as well as perfect foresight, and they had no other goals except establishing a general equilibrium in the market