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Behavioral Finance And Stock Market Risk Control

Posted on:2003-09-25Degree:DoctorType:Dissertation
Country:ChinaCandidate:H Y GuoFull Text:PDF
GTID:1116360065962055Subject:National Economics
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After the mainstream turns to the individual's behavior research and the increasing evidence showing the drawbacks of the present financial theories, behavioral finance is attached much more importance recently. The dissertation researches the behavioral finance on the background of the investment theory, inherits critically the traditional linear paradigm and explores the non-linear one. It mainly discusses the factual process of decision-making, the market function, and from which the risks and controls resulting.The kernel viewpoint is :l)investor's decision is bounded rational, and systematical biases;2)the security market is limited rational. The investor's behavior leads to mal-pricing and controls of securities. The price's irrational volatility leads to confidence-lose and financial crises. The two solutions to it are 1) fosterage of the rational individual investor; 2) information disclosure.Chapter 1 retrospects the financial investment schools. It distinguishes the beginning, reviving, and development of behavioral finance. Behavior's analyses point out how the investor decides and what are its decision's factors.Chapter 2 is the general introduction to behavioral finance. It explores the research paradigm and the definition system.Charpter3 circles around the process of decision under certainty, it is limited by the difficulties, cultural habits, social norm, environment relation,survive instinct and the cogitive capacity.the investor's behavior is bounded rational or irrational.Chapter 4 concentrates on the features of investor's behavior under uncertainty. It erriphases the influence of the herd behavior and anticipatory emotion towards investment decision-making.Chapter 5 and chapter 6 are transitional parts of the essay. The behavioral finance pays much more attention on the significance of financial market rather than the difference of individual investment decision. The aim of analyses is to find how the security prices and the market functions, the systematical cogitive biases results in the deviated reaction to the stock price information, the irrational noises trade results in the huge volatiltiy. Both leads to the non -efficiency and systematical risk.Chapter 7 concerns how to control the risks. After discussing the market risks based on the individual investor behaviors, it describes the connotation, materialized model, and explores the risk's position in china security market. It finally draws the two risk-control solutions: 1) fosterage of rational individual investor; 2) information disclosure .On the basis of compound of psychology and finance theory, the dissertation follows the logic of behavior finance. It begins with the psychological rules and exploring the nature of economic phenomenon by drawing three features: practical features of investment action, reaction feature of security's price, limited rationality features of the whole security market.
Keywords/Search Tags:behavioral finance, investment decision-making, information understanding, Systematical biases herd effect, overreaction, bounded rationality, Noise trade, rational investment, information disclosure, risk-control
PDF Full Text Request
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