Study On The Irrational Gamble Bubble Of Stock Market

The theory of speculative bubbles can be divided into two parts: rational speculative bubbles and irrational speculative bubbles. The rational speculative bubbles follows the way of rational people. The important in it is the rational speculative bubbles model. As the behaviorism method flashing in economics and finance, the theory of speculative bubbles is challenged by what hadn't met before. A lot of economist begin to give up the traditional classical suppose about rational behavior, and analyze bubbles from the behavior of investor. That is irrational speculative bubbles. The irrational speculative bubbles thinks the asset price bubbles is made by the behavior of investor in market. It's a external existence.This paper would study the investor's behavior in stock market, and combine prospect theory, ANN with DSSW, build a new irrational speculative bubbles model based on behavior finance. And it would study the bubbles'developing in Chinese stock market, study the invest risk in bubble developing, study the logical range of stock market bubbles, study the question of bubbles'control according of the model.This paper would introduce the speculative bubbles theory simply, and would give a definition of irrational speculative bubbles. Then it would introduce the theory of behavior finance, analysis the explaination of behavior finance to stock price's wave and the irrational speculative bubbles in stock market. It also would introduce some irrational speculative bubbles model, such as Fads Model, Contagion Model and DSSW. These theory would make a foundation for the study of bubbles'birth and the irrational speculative model.This paper would introduce the birth principle of irrational speculative bubbles. The existing of uncertain and incomplete information makes a foreshadowing to the irrational speculative bubbles'birth. At the same time, the multiplicity of investor's character easily makes herding effect, stock price's controlling, feed back trading and so on. These invest behavior urges the irrational speculative bubbles'birth, and they make a lot of noise investor. The uncertain of noise investor to information and their excess response make the irrational speculative bubbles'birth.At the base of the theory above, this paper would build a new irrational speculative bubble model at the base of combine behavior finance, ANN with DSSW. Then it would study bubbles'birth, expanding and breaking. At last, this chapter would study the recognition of bubbles'developing, the logical range of bubble, the question of bubbles'control.This paper would give some Chinese example when studying the common law of irrational speculative bubbles. And in the demonstration study, the paper would mainly concenter on the Chinese stock market. First, it would test the stock market's validity, and test the herding effect and feed back trading. Second, it would test the bubbles'existing of our stock market, and ensure our stock market's bubbles using the new irrational speculative bubbles model. Last, it would test the recognition in our stock market bubbles'developing, the logical range of bubbles, the question of bubbles'control and countermeasure in our stock market.