In the financial crisis that precipitated the 2007-2009 recession, people systematically overestimated their prospects for financial gain. Which branch of economics would most likely have expected to predict this?

A) neoclassical economics
B) Keynesian economics
C) behavioral economics
D) classical economics

Behavioral economics is the branch that integrates insights from psychology into economic models, focusing on how market decisions are made and the mechanisms that drive public choice. It is particularly concerned with the bounds of rationality of economic agents. Behavioral economists study how the psychology of investors or consumers affects financial decisions and markets, which includes the systematic overestimation of prospects for financial gain.