Finance and Human behaviour

Many people believe that people react in similar manner to a given information set and that is why they attribute many things like existence of financial derivatives and stock market variations to Information asymmetry. I remember somebody saying once that if everybody has same information the index will be flat. But One more important factor to be considered is reaction of people to any given information set. Different people will react to same information differently. And that is where finance can be related to streams like psychology and other theories related to human behavior. One interesting thing that can be done is to make some space for human behaviour in mathematical equations. Some days ago I was looking at weighted average cost of capital equation and tried to analyze sensitivity of various factors mathematically and then tried to look for various places where we could incorporate Human behavior. I was not able to do a proper justice to this exercise because of my lack of understanding of various factors but I found this exercise interesting. I searched internet for the same and got to know that a lot of research is going on in this area. I hope we will reach some conclusions soon. I remembered comment of one of my profs who says if you and I could predict human behavior we could spend rest of our life at Bahamas.