Behavioral Economics

In an ideal world, people would make rational decisions and markets would be efficient. This is the assumptions about the economic realm. In economics, the rational choice theory states that when humans are presented with various options, they will choose the option that maximises their satisfaction. But we find the reality of being different. The final decision even though has to be the best choice people end up getting swayed by emotions and poor choices. Behavioural economics explains that humans are not rational and are incapable of making the right decisions. Behavioural economics draws on psychology and economics to explore why people sometimes make irrational decisions, and why and how their behaviour does not follow the predictions of economic models.
Behavioural Finance, a subfield of Behavioral Economics, studies the psychological influences and biases affecting the financial behaviours of Investors and Professionals. The field tries to study biases and other anomalies to study the none rational behaviours in the area.
A classic example would be herd behaviour. It is the behaviour of individuals in a group acting collectively without centralised direction. Irrationality and Fear drive actions in most cases. Examples could share prices dropping or shooting up, Interest in a particular class of Assets during a period. Economic assumptions and models like the Efficient Market Hypothesis, get challenged. Lack of sufficient knowledge about the Investments and markets and misplaced faiths can make buy rallying shares and bubble assets.