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The field of behavioral finance argues that many financial phenomena are the result of less than fully rational thinking on the part of some market participants. The field has by now become very visible to practitioners. For researchers in the area, this is exciting, but also worrying, because some of the public discussion is running ahead of the actual science. In this talk, as a corrective to the hype, we discuss three ideas from psychology that have been linked to important financial applications in a rigorous and compelling way.