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Psychology Analysis of Investors from the Perspective of Behavioral Finance

In: Proceedings of the 2022 International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2022)

Author

Listed:
  • Zizhen Cheng

    (The University of British Columbia)

Abstract

With the continuous expansion and integration of the securities market, the efficient market hypothesis of traditional finance can no longer fully explain the changeable psychology of investors. Behavioral finance and traditional finance are constantly colliding. Knowing various risk indicators and returns, how investors will make choices is the core of behavioral finance. This paper rationally explored investor personality traits and emotional decision-making, the causes of cognitive errors, mental accounting effects, and investment portfolio recommendations. This paper added more explanations and case studies on the basis of some theories put forward by economists. It includes some economic problems existing in traditional finance, the collision between traditional finance and behavioral finance, and the contradiction of efficient market and rational expectations. And also analyze some personal traits in investment psychology, like the cognitive bias, overconfidence, bystander effect, and other traits. Finally, some investment suggestions are put forward to help investors better build psychological accounts.

Suggested Citation

  • Zizhen Cheng, 2022. "Psychology Analysis of Investors from the Perspective of Behavioral Finance," Advances in Economics, Business and Management Research, in: Faruk Balli & Au Yong Hui Nee & Sikandar Ali Qalati (ed.), Proceedings of the 2022 International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2022), pages 727-733, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-052-7_83
    DOI: 10.2991/978-94-6463-052-7_83
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