Justin Fox's The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street is a book that chases down a provocative debate that the author discovered while working for Fortune magazine: the idea that the market is driven by fear, psychological quirks, fads, and other "irrational" factors, and as such, it does not represent a set of prices derived from the decisions of millions of actors, but rather a set of nearly impossible to predict fluctuations that are about as useful as a series of coin-tosses.
This hypothesis is a timely one, given the recent econopocalypse, but readers who (like me, I admit) turn to the book to find a snarky excoriation of the idiocy of the rational market ideologues who got rich while annihilating the economy will not find it here. Instead, what Fox has put together is a thoughtful, often fascinating, always illuminating history of the idea of market rationality, and the fortunes of the economists, bankers, regulators, philosophers and psychologists who've sought to explain the stormy seas of the market (and to get rich while doing it, of course).
If you've followed the behavioral economists and the exciting, weird and difficult-to-generalize conclusions they've reached since the crash (or the last one), Myth is a good grounding in the ideas that behavioral economics reacts against: the notion that a small group of fast-moving, informed investors can keep the market rational by exploiting the idiots and the suckers and the weirdos, taking all their chips and sending them away from the table.
Myth considers "rational" explanations for bubbles and crashes -- the fact that CEO and fund-manager compensation is structured such that a "rational actor" will do things that make the market go blooie -- and also the most pervasive "irrational" economic factor: overconfidence, which seems to be at the root of many, if not all, of the market's oddities.
By the end of the book, I was left with a much clearer understanding of how little I understood: how much of the technical jargon and specialized jargon of finance serves as window-dressing on a bunch of unproven and half-proven ideological assertions, and how little there is in the new "science" of behavioral economics to explain all of it (yet).
The overwhelming conclusion I came to when it was all done was this: if I was starting out at university right now, I'd go into behavioral economics and see what there is to be seen. It's a new territory, rich and barely mapped, and there's plenty to discover there.