Study On "Irrational" Investment Decision-Making Behavior

The traditional decision-making theory simplifies the course of decision-makers and neglects many social and psychological factors as"irrational".The author observes many facts not following the rational hypothesis and pay attention to study of"irrational"decision-making.This research analyses decision-making by behavior psychology to take social and psychological factors into account. Currently, it is very meaning to analyse the behavior of investor since the investment system is not perfect,the investors have not their mature investment style, there is much asymmetry information in investment market and there are many factors influence the decision-making .This paper divides"irrational"to two kinds ,one is so-called"irrational"by the traditional decision-making theory that is not really irrational because the traditional rational choose doesn't make real satisfactory effect since it neglects many factors,the other is that the decision-maker makes unfavorable decisions and has bias because he is influenced by many factors.The research finds some"irrational"decision-making rules and characters by use of behavior economics to improve the ablity of explaining economy phenomena so that the analyse of decision-making is nearer to reality. The main researches include the motivation of decision ,internal factors and real decision course not following traditional decision-making theory.The main research measures include many psychology experiments and statistic test.The research pay important attention to the repetition of experiments,but different from physics or chemistry experiments, they are from the real decisions of investor and there is no need and possibility to design many same decision conditions and the rules can be found in need of careful analyse.By the management experiment and analyse,the research finds the traditional decision-making theory can't explain many real decision-making courses and makes many decision biases.The research finds:1)The investors don't decide strictly following expected value theory.Their decisions and attitudes of to risk relate to the real prospects.When facing gain,they incline to risk aversion,when facing loss,they incline to risk seeking.The gain or loss is depended on reference point,namely,their prospect. 2)The investors often have biases in the course of decision-making.They are insensitivity to prior probability of outcome;oversensitivity to characteristic describing ;bias of easy gain information;anchoring mind which makes decision be anchored at something lacking relation;mental account problem making investors decide not according to maximizing the whole value;more influence of hard-to-evaluate attribute when facing joint evaluation,more influence of easy-to-evaluate attribute when facing separate evalution; extreme decision easily to make when the members have close views in decision group.3)Investors over care short value while neglect persistent healthy capability of development as they are influenced by unhappiness decision idea.It will lead to decrease of the whole society welfare and persistent capability of development.4)Investors prefer short value to long and whole value because of self-control problem,though they know the long and whole value is bigger than short value.So the government should build the system of encouraging the project of persistent capability of development to counteract the self-control problem.5)The cognitive dissonance is a result from the the decision of investor. Dissonance accompanies the pressure of dissonance reduction.Thus,it influences the new decision.6)The strategy adjustment of decision-maker under the laws and rules brings risks to rivals when the decision condition changes.These risks are called behavior risks which result from decision-making.The investors should pay important attention to behavior risks.7)It is irrational and is not helpful to build a persistent and healthy investment market that the form of organize and system of property lack cares for human .