On The Development And Implications Of Behavioral Finance Theory

Behavioral Finance Theory is the newly-emerged theory since the eighties of the 20th Century. It broadly absorbs the findings of Psychology, Sociology, anthropology, especially the study of behavioral decision, and observes the determination and variation of the asset price from a new perspective. It tries to reveal the formation of asset price and the actual decision process of investors and can reasonably explain some anomies, therefore it has become the most active theories in the field of capital market. In this thesis, we try to make a comprehensive introduction to the evolution of Behavioral Finance Theory and its main content. Then we make a comprehensive comparison between Behavioral Finance Theory and the classic capital market theory on the basis of the foundation of theories, the study methods and the study object, and we point out that Behavioral Finance Theory develops the useful or healthy factors of the classic capital market theory and discards the unreasonable or unhealthy factors of the classic capital market theory. In the end, we discuss the implications and the reference of Behavioral Finance Theory to our study on capital market.