A Kabbalah System Theory Modeling Framework for Knowledge Based Behavioral Economics and Finance

Kabbalah and its Tree ofLife integrate the cognitive, behavioral/emotional and action levels of human existence, explaining the relations between these and their unity. This makes it an ideal framework for behavioral economics and finance where cognitive and emotional biases and heuristics play a central role. In Burstein and Negoita [9], we began to develop a Kabbalah system theory, modeling the Tree of Life as a hierarchical three level feedback control system corresponding to the cognitive, behavioral/emotional and action levels. We will further develop this here by focusing on system dynamics, in order to create a Kabbalah system theory modeling framework for a knowledge based behavioral economics and finance. In this new framework, emotional intelligence theory [19–21, 40] and Polanyi personal tacit/explicit knowledge theory [36, 37] are used to model the emotional and cognitive level processes.Herewe are connecting these theorieswith behavioral economics and finance. While behavioral finance focuses on the impact of knowledge/cognition and emotional factors, the intrinsic dynamics of these factors is not considered in depth. This is why behavioral economics and finance can benefit from integrating emotional intelligence andknowledge theory in theirmodeling.OurKabbalah system theory creates the modeling framework for that. In particular, it allows connecting the recent knowledge based economic theory attempts with behavioral economics in a unified knowledge based behavioral economics. We apply this in particular to Kabbalah behavioral, knowledge based asset pricing modeling. G. Burstein (B) · C. V. Negoita Department of Computer Science, Hunter College, City University of New York, New York, USA e-mail: [email protected] V. K. Mago and V. Dabbaghian (eds.), Computational Models of Complex Systems, 5 Intelligent Systems Reference Library 53, DOI: 10.1007/978-3-319-01285-8_2, © Springer International Publishing Switzerland 2014 6 G. Burstein and C. V. Negoita