Search

Research on Individual Investor's Decision-Making Behavior Based on Behavioral Finance

Author(s)

Yucheng Wang*

Affiliation(s)

Zhejiang University of Finance & Economics, Hangzhou, Zhejiang, China *Corresponding author

Abstract

This paper focuses on the decision-making behavior of individual investors from the perspective of behavioral finance. Through in-depth discussion of various psychological biases and cognitive limitations in behavioral finance, such as overconfidence, loss aversion, herd psychology, etc., this paper analyzes how these factors affect individual investors' information processing, risk cognition and preference, investment strategy selection and other aspects in the investment decision-making process. Combined with actual cases and relevant research data, this paper reveals the characteristics and rules of individual investors' decision-making behaviors, and puts forward corresponding education and guidance strategies, aiming to help individual investors improve the rationality of decision-making, enhance investment performance, and provide theoretical basis and practical reference for the stable and healthy development of the financial market.

Keywords

Behavioral Finance; Individual Investors; Decision-Making Behavior; Psychological Bias

References

[1] Xu Shan. Research on Corporate Value from the perspective of Behavioral Finance [D]. Changchun University of Technology,2019. [2] Li Sujun. Research on Individual Investment Psychology and Behavior Based on Behavioral Finance [D]. Graduate School of Chinese Academy of Social Sciences,2012. [3] Li Jing. Research on Investor behavior in Stock market based on Behavioral Finance [D]. Graduate School of Chinese Academy of Social Sciences,2012. [4] Shen Jun.Research on Investor behavior of Stock index futures based on Behavioral finance [D]. Southwest University of Finance and Economics,2013. [5] Li Shilin, Behavioral Finance and Securities Investment Behavior Analysis, Social Sciences Academic Press, 2005, p. 58. [6] Tversky, Amos, and Daniel Kahneman. 1979. “Prospect theory: An analysis of decisions under risk.” Econometrica, 47: 263-291. [7] Tversky, Amos, and Daniel Kahneman. 1992. “Advances in prospect theory: Cumulative representation of uncertainty.” Journal of Risk and uncertainty, 5(4): 297–323. [8]Kahenmann D, Tversky A, "Prospect Theory: An Analysis of Decision Under Risk" Econometrica,Vol. 263-29, No.47.1979. [9] Rao Yulei, Liu Dafeng: Behavioral Finance, Shanghai University of Finance and Economics Press, 2003, p. 104. [10] Sun Peng. Research on the prominence effect and prospect theory effect of Chinese securities market [D]. Shanghai university of finance and economics, 2023. DOI: 10.27296 /, dc nki. Gshcu. 2023.000061.