care to explain to me how the laws of compound interest are "behavioral"?
Sure. Interest rates are prices. Prices are an equilibrium phenomenon, but, fundamentally, they arise from individual behavior. So, in the end, to explain interest rates you need to build a model of behavior. Change the way people discount the future or form habits, and you will get very different predictions about interest rates. You will also get very different predictions about what sorts of contracts would be signed (so, what sort of interest you'd be compounding and how).
Formulas are just some squiggles on a piece of paper. Their meaning and applicability derive from how we understand the world. And, as economists, fundamentally, we understand the world in terms of human behavior.
Ag,
There is a difference between "interest rates" and "compound interest."
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