Please read Gavin Kennedy at:

http://adamsmithslostlegacy.com/ASLLBlog.htm

Adam Smith never used the "invisible hand" metaphor to describe the marketplace.

It is a very recent invention, talk with Paul Samuelson and ask him why he misrepresented Adam Smith to the economic world.

Does any one really believe that pricing decisions are made by invisible hands?

For me, neither the invisible hand (whether it was or wasn't Adam Smith's notion) or the irrational world of behavioral finance perfectly describes the world. For me, both concepts seem to apply, with us being more rational under some circumstances and more prone to cognitive bias under others (i.e. we're predictably irrational). Perhaps Simon's old "bounded rationality" construct should be expanded to include cognitive bias and emphasize the word "bounded" more.

(As the institutionalists have shown, history and culture can also prevent us from making rational choices; it seems, then, like a catalog is in order for describing when, and under what circumstances, rationality tends to hold or be discarded. In any event, it sure does seem that we are less rational than we like to think.)