The Influence of Investor Psychology

The Influence of Investor Psychology Abstract: The efficient market casualty (EMH) could not be supported by most of the empiric researches results in 1980s. Previous studies which be related to the model of demeanor imply that some non-rational investors would invest anomalies in certain market. In 1979, Kahneman and Tversky suggested to make the prospect theory as an optional woof which was expected utility when it came to describe investors behaviors. Based on out front works (Lichtenstein, Fischhoff and Phillips, 1982; Shefrin and Statman, 1985), this paper checked the overconfidence influence, the mental explanation, the crime of regret and the self-control with the disposition effect of selling winners uniform early and holding losers excessively long. The results of data ana lysis on 290 investors demonstrate that there are four psychological factors having uncivil influence on the disposition effect.

The researches show that: (a) overconfidence, mental score and self- control would proceed the disposition effect positively, and (b) self-control would impinge on the disposition effect negatively. Therefore self-control could bring vote down pat(p) the investorsirrational behaviors. Introduction An old Wall Street motto states that cardinal factors move the market: fear and greed. Although true, this characterization is further too simplistic. The human mind is rattling sop histicated, and human emotions are very comp! lex. The emotions of fear and greed just dont adequately describe the psychology that affects people. Few other texts deliver this discipline beca implement traditional finance has foc purposed on developing the tools that investors use to optimize expected return and risk. This go-ahead has been fruitful, yielding tools much(prenominal) as asset pricing models, portfolio theories, and option pricing. Although investors should use these tools in their investment...If you want to get a full essay, assemble it on our website: BestEssayCheap.com

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