The Optimal Portfolio Selection Based On Mental Accounts

Portfolio management is an important part of the operation and management of enterprises and organizations,especially the optimal portfolio selection problem,it is the key factors of determining whether enterprises and organizations to survival and long-term development.Practice,all the enterprises or organizations have tried to use limited resources to obtain the biggest benefit by project investment.The optimal portfolio selection is influenced by many factors.decision-makers are the main factor of project investment decision-making,the biggest problem facing is how to according to the level of available resources limit to select the optimal project portfolio.Alternative projects and maximum of resources is the objective existence condition,the project decision-makers have the characteristics of subjective initiative,behavior of them determines the final project portfolio.Traditional optimal portfolio selection theory assumes that the project is perfectly rational decision-making.However,the assumption does not accord with the actual situation of the decision maker,and therefore the phenomenon of the mismatch between the establishment and the need of the optimal portfolio model is caused.Shefrin and Statman(2000)considered the behavior of the decision makers research portfolio selection on the basis of modern portfolio theory,they broke the limit of "rational man" hypothesis of modern Portfolio theory,risk measurement and investors are risk averse,caused the theoretical model is more close to the actual investment behavior of investors.Therefore,makers in the process of project portfolio management of individual behavior factors gradually are taken seriously,the research on the effect of behavior factors on the optimal portfolio selection is lack.In this paper,the factor of behavior finance is to be considered into the problems of project decision making,and combining mental accounting theory and portfolio investment ideas,proposed a new method to select the optimal project portfolio.In addition,Numerical simulation shows that the method to select the optimal portfolio is different,and the chosen portfolio risk/reward ratio is superior to the traditional mean-variance model.At last,Based on existing research this paper puts forward some problems worthy of further study.