Discussion On The Theory Of Behavioral Finance

Abstract： behavioral finance theory as a new research field is introduced into China from the last century 80's， the study not only explains many anomalies in the market， also poses a challenge to traditional finance theory， some could not be explained by traditional financial theory， behavioral finance theory provides a new vision for us.

Keywords： behavioral finance， basic model， financial management

The Basic Content， the Theory of Behavioral Finance

Based on 1 Theoretical Basis

（1） Based on traditional finance—Not the behavioral finance theory denial of the traditional financial theory， but in the premise of human behavior has to accept the utility maximization tendency to human behavior， limited rationality as the basis， to amend and supplement to the.

（2） The psychology foundation—Psychologists through experiments， human decision making under uncertainty will obviously shows the characteristics as follows： Psychology overconfidence， loss aversion， regret aversion， psychological expectations and confirmation bias etc.. Judge breakthrough research on decision-making and individual psychology has laid the foundation for the development of behavioral finance theory..

Based on 2 Behavioral Economics

Behavioral economics is the economic behavior of using psychology， sociology， the science of decision making theory and method to study the individual or group of science. The results based on practical experience as the basis， revised the basic assumption in traditional economics of marketing and rational people， believe that the reality of human behavior is not only selfish； he also is restricted by the social values. Economics in the traditional sense is often considered a must rely on the observation of the real world； it depends on the reasonable assumption. But now more and more research began to use experimental methods to study economics， depending on the experiment and data collection， so the conclusion is more and more close to reality.

Based on 3 Basic Models

（1） The herding model—Sequential herding model most influential proposed by Bannerjee explains the reasons and consequences of group behavior of investors in the market， the causes of group behavior of investors to influence driven utility maximization and \"pressure group\" emotions such as.

（2） BAPM model—It is on the CAPM model is adjusted by Shefrin and Statman， the BAPM in the investors are divided into two types of traders and noise traders. Information traders are rational traders in strict accordance with the CAPM system will not act， deviation； noise traders do not press the CAPM act， which would make all kinds of cognitive bias error.

（3） BSV model—The BSV model proposed by Barberis， Shleifer and Vishny that investors have selective bias and conservative bias two psychological bias in decision-making. But because of income changes are random， so the above two kind of deviation will enable investors to make two types of errors in judgment， namely under reaction and over reaction.

（4） DHS model—Think DHS model proposed by Danie， Hirshleifer and Subramanyam， the investors are divided into free information and information of two kinds， the former does not exist biases of judgment， the latter displays self preference and overconfidence two judgment bias. Self bias resulted in investors' reaction to the private information and public information on the excessive reaction； overconfidence leads investors to exaggerate the private information on stock value judgment accuracy.

（5） HS model—The HS model proposed by Hong and Stein of the investors in the market is divided into momentum traders and message viewer two. In forecasting stock price， momentum traders are completely dependent on the price change in the past， the prediction is based on a simple function of the historical price； news observer does not rely on the current or past price， but according to the obtained about the future value of stock information prediction.

The Prospect of Two， Behavioral Finance Theory

The science of behavioral finance theory is that it breaks through the standard financial theory to focus only on the optimal decision-making model， rational investment decision model is to determine the actual investment decision model of financial assets price change hypothesis， so human behavior model is built on the basis of more realistic， a new perspective to explain the various anomalies in financial market on the.

Reference：

[1]Hersh Shefrin，Meir Statman：《Behavioral Portfolio Theory》，《Journal of Financial and Quantitative Analysis》Volume 35，NO2，June 2000

[2]Ajuhan. “Analysis of behavioral finance theory\" .Education Digest. 2012，（ 1 ）：13

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