I found this post on Chris Blattman's blog about a recent paper by Abhijit Banerjee and Sendhil Mullainathan looking at psychological explanations for the puzzle that poor people are willing to pay what seem like extraordinary rates of interest on short term loans. They look at a number of possible psychological explanations - behavioural development, I suppose, rather than behavioral finance. However, I think the reasoning in a book reviewed here recently, Portfolios of the Poor, is more persuasive. It goes that because of cash constraints, very poor people have a much shorter time horizon than the year assumed by such interest rate comparisons.

Also on the development front, an interesting blog post from Bill Easterly, about the imperial origins of development as a subject.