The Study Of Investment Behavior Of Individual In China's Security Market

Traditional finance theories assume that financial market participants are perfectly rational and argue that the financial market is always efficient. Faith in this theory was eroded by a succession of discoveries of anomalies, and of evidence of excess volatility of returns. Finance literature in this decade and after suggests a more nuanced view of research on behavioral finance and it has begun and is forming a complete theoretical system gradually. Behavioral finance argues that some financial market phenomena can plausibly be understood only under the assumption that some market participants are not fully rational. Compared with the rational analytical frame of traditional financial theory, behavioral finance pays much attention to a person's real psychology and economic behavior, which offers a realistic guidance for financial decision.According to the psychological experiments targeting on the individual investors of Chinese stock market, we found that when at face of risk choice, the tested investors have familiar cognition bias which include obvious overconfidence, ambiguity aversion, loss-aversion as well as anchoring and adjust. Informed by that, we can deduce that when making a decision, Chinese individual investors have analogic mental biases which had been found abroad. Non-rational behavior of individual investors bring in a lot of impact on stock market. Basing on the result of the survey and the special environment of China stock market, and combining behavior finance theory, the article has proposed to the protection of the benefit of individual investor, bringing around some suggestions from three aspect which including consummating the function of supervising and managing organization, enhancing the quality of company and self-perfection of individual investor.