Behavior Finance Research Of Information Influence On Fluctuation Of Stock Price

Behavior finance, revived in1980s, is the advanced field of finance study in theWestern countries at the present time. The great significance of this theory is that, itabsorbed the achievements of modern psychology study and enables the finance studybased on practical supposes but not on strict and unpractical ones that modern financetheory is based on. So behavior finance ushered in a new era in finance domain.Continuous percolation model, come from statistical physics, comply the quantitativeanalysis of signal transduction impacting on investor decision, from it has been inintroduced into the research of information conduction model.Firstly, the origin and the development of behavior finance are reviewed, and therecent studies on behavioral finance and continuous percolation model are introduced. Thetheoretical basis and model of behavioral finance are systematic interpreted, and used toexplain the abnormal phenomenon appearing in the actual market. At the same time, stockmarket information theory on the basis of behavioral finance is introduced.Following the introduction, the model of stock market information transmission,using the continuous percolation model, is built on the analysis of investor behavior. In theassumption of inefficient market and the bounded rationality of investors, the percolationmodel of information transmission, considered with investors’ response mode from theanalysis of behavioral finance, explains the market phenomena more effective.Finally, the significance and effecting of parameters in the model are discussed,according to the analysis of the numerical simulation. Comparing the actual data with thesimulation of the behavioral finance model and the classical model, more reasonableexplanation of the abnormal phenomenon in the capital market is concluded, also, thetrend of development and the method of effective are found.