This book chapter examines the origins of behaviors observed in modern financial markets—often deemed "irrational" by traditional economic theories—through the lens of evolutionary psychology and genetics. Its central thesis posits an evolutionary mismatch between the human brain, which evolved to survive in the physical and social environment of our hunter-gatherer ancestors, and the abstract, fast-paced, and complex modern financial system.

The chapter first analyzes panic selling during sudden market declines as a manifestation of the "fight or flight" reflex. This instinct is a neurophysiological process initiated by the amygdala and continued via the hypothalamic-pituitary-adrenal (HPA) axis, leading to cortisol release.

Secondly, the chapter investigates the genetic underpinnings of individual differences in financial behaviors. Focusing on the field of Genoeconomics, it explores how specific gene variants influence risk tolerance, impulsivity, and stress response.

In conclusion, the chapter argues that financial decision-making can be understood not only through market dynamics but also through our neurobiological and genetic architecture, shaped by millions of years of evolution. This perspective offers valuable implications for investors to manage their instincts, for institutions to develop better risk management strategies, and for regulators to design more stable markets.