some example on human psychology.
when bad news come out, people has fear and they will not go out and buy stuff... and will not make any investment. so demand goes down. while shop owners see demand down, they worry their business cannot tahan so they lower their price down. while those ppl who has greed will say since the stuff so cheap now... i go borong a lot la.. when economy better i sell out all again at higher price. just some example of behavioral economics rite.. which palys major part in economics IMHO.

To understand the economic, we must first understand the psychology & rationality of human. After all, human are the players and main factor of a moving economic.

Many professionals especially those in relevant areas are trying to build a science model of economics and finance. With these model, we can easily come out with a hypothesis base on the model which makes market prediction as easy as snapping ur finger.

Economists are like scientists plying their science and math in economics, especially in the Stock or futures market. But more often they phailed, because the main factor is always human psychology. Psychology plays a large role in economics especially the stock market. Look at how Technical analysis study human psychology. I personally earn quite a sum from the stock market by studying human psychology.

I'm no expert in economics, but I strongly believe it's all about human greed and fear.