The Behavior Finance Model Of Stock Market And Empirical Study

Traditionally, financial study relies on basic hypothesis of rational people, that is, driven by personal interest, people have the ability to make rational judgment and decision in uncertain condition. Many financial researchers think it's not scientific to study people's psychology and emotion, and they think financial study is not an experimental science. However, with continual development of financial market, more and more paradoxes, which can't be explained by basic financial theories, flood the market. These enigmas force some financial researchers to begin to reflect upon the foundation of financial study—whether the hypothesis of rational people can cater to the market. Behavioral financial science was born with disagreement, and it brought great impact and influence on traditional financial theories, thus more and more financial researchers begin to pay close attention to behavioral finance At present, scholars in China concentrate their researches mostly on the comparison and analysis of traditional finance and behavioral finance, empirical research of behavioral financial science, effectiveness and ineffectiveness of market, etc. Independent theory and breakthrough in research of application of powerful mathematical analysis tool are still lacking. Therefore, systematical research on behavioral financial theory, empirical research and application is of great theoretical importance and realistic urgency for establishing new system of financial science, China stock market in balanced, stable and harmonious development, and superior corporation administration environment.This thesis tries to make discussion and research on behavioral finance in three aspects below: theory, empirical research and application.In Chapter 1, it discusses the disadvantage of the classical finance and introduce the rise of the behavior finance In Chapter 2, it introduced the forefront field and the research directions of behavior financeIn Chapter 3, it modifies classical DHS behavioral model in theory, that is, it brings attitude variables into model, so that it can fit in with financial market variety feature better.In Chapter 4, combined with DHS overreaction theory, it makes empirical research of herd behavior in China stock market and makes the conclusion that "The herd behavior happens obviously when the stock market turns from the bull market into the bear market".In Chapter 5, based on the conclusions of the chapter 3 and chapter 4, it provides investment tactics in China stock market with ethologic feature.