Experimental Study Of Individual Investors' Securities Portfolio Inertial Behavior

Under the strict assumption,the traditional financial theory answers the question of how to do in asset market,and the reality is that the financial market is very different from the hypothesis,so it is difficult for the former to make a reasonable explanation to the anomalies in financial market.Behavioral finance,based on the psychological and behavioral characteristics of people to discuss how investors actually do,put forward some reasonable explanation in line with the reality of people's real reaction.Although many behavioral finance theories have not formed a completely theoretical system and the study of investor behavior is still in the exploratory stage,the research result of cognitive psychology and social psychology that behavioral finance based on is the consensus of academic circles now,which has certain practical and theoretical value.Studies have shown that people are making economic decisions that are influenced by current or previously established economic decisions and exhibit a reluctance to change the status quo or to delay changes when they make economicdecision.Some scholars believe that this is an irrational behavior,and defined it as inertial behavior,or status quo bias.In this paper,the adjustment inertia refers that the individual investors are reluctant to adjust their portfolio even they realized that the asset risk change is happening.This irrational behavior not only violates the optimization principle of portfolio theory based on Markowitz MV model,but also increases the investment risk faced by individual investors in the capital market,and even aggravates foam generation or extrusion in the capital market.The traditional financial asset portfolio theory assumes that the return rate of the risky asset obeys a certain normal distribution,investors are fully aware of the mean and variance of the normal distribution,could use it as the combination decision-making basis and there is no the transaction cost.The purpose of the investor portfolio adjustment is to optimize the combinations that have been formed based on the new conditions.In particular,when the risk of portfolio risk changes,the investor should reassess the expected return and risk of the portfolio to keep portfolio at a new optimal point.If investors have adjustment inertia,would undoubtedly deviate from the optimal combination point.In this paper,a simple investment experiment was set up in the laboratory to examine the behavior of individual investors portfolios inertial behavior based on dynamic panel system GMM model.Experimental results show that individual investors current portfolio will be affected by the prior formed decision,and the proportion of investment in each risk assets would show a strong continuity,and this inertia would be weakened by the changes in rates of return on assets,but is not affected by changes in the expected risk,it did not follow the traditional portfolio theory that the expected benefits and risks of risky assets should determine the proportion of investment asset risk approach.This behavior easily leads to individual investors to take more risk,individual investors should try to restrain such a status quo bias,with the market information to fully weigh the benefits of risky assets and risk,to adjust the portfolio to diversify risk.Laboratory experiments,as a method of generating empirical data,not only can observe the behavior of the participants decision-making results,but also observed that the behavior of the expected process.Experimental economics,with its advantages of controllability,comparability and repeatability,provides the possibility for the study of the problems in the capital market and the examination of the basic theory.How to use this new research tool correctly to ensure the reliability of the experimental results and the persuasiveness of the results analysis is an inevitable challenge to the study of the asset market in experimental economics.In this paper,we make a comprehensive consideration of the asset trading system,the experiment participants 'selection and the asset market information.By simulating the system similar to real transaction rule and individual investors' real investment situation,this paper not only achieve the basic theory of portfolio testing,but also test the existence of individual investors adjustment inertia.The research results of this paper have important practical significance to correctly guide investors' investment philosophy,help individual investors to self-regulate investment behavior and avoid irrational investment behavior.Faced with the information of the financial market,individual investors are more taken a simple approach,or blind obedience or a gambling on the understanding of bias in this process is inevitable.If we can have a systematic understanding of the common behavioral bias,individual investors can make rational choices and transactions in decision-making,which has an indirect guiding effect on the improvement of investment efficiency and regulation of financial market.