A Theoretical Study Of Emotional Impact On Risk Decisions And Investment Portfolios

At present,Behavioral Finance does not explain the mechanisms of the problem of risk decision paradox.Anticipatory emotions in psychology are seen as an effective factor in solving the paradox of risk decision making.This article is under this main point of view.In order to introduce the theory of anticipatory emotion into the framework of economics effectively,this paper sets up the hypothesis of ecological rationality and decision maker's self-interest.Under the above assumptions,this paper argues that regret and joyful are the main factors that influence the outcome of the decision.The subjective intention and external environment of decision maker make the avoidance of regret and pursuit of joyful become the main motivation of assistant decision making.Under the regret theory,the decision maker use the expected utility theory form the paradox of risk decision-making.The concept of anticipatory emotional motivation is the inheritance and development of the "anticipated emotional impact utility" in psychology,which can effectively explain the paradox in experimental data.By introducing the expected emotional motivation into the classical portfolio theory,the investment boundary curve equation of the investor avoiding regret motivation and pursuit pleasure motivation is derived through the Quadratic Programming.After the introduction of emotional motivation,The investors whose motive is avoid regret emotion tend to buy less risk and increase the risk of asset investment ratio,whose investment boundary curve is higher than minimum variance boundary curve;The investors whose motive is pursuit of joyful emotion tend to buy more risk and decrease the risk of asset investment ratioin order to reduce risk,whose investment boundary curve is lower than minimum variance boundary curve.Immediate emotiont also has an impact on investment decisions.Immediate emotions form a group mind among investors through the means of communication.In the group mind state,investors will expect the return of the stock market in mistake,which led to the market upward or downward.under this conditions,the volatility of the stock market will affect investor sentiment,forming a positive feedback loop.The empirical data prove the validity of the above hypothesis.According to the conclusions of theoretical and empirical research,this paper puts forward policy recommendations for the securities market.Different from the suggestion of the system construction,the policy suggestion put forward in this paper focuses on the psychology of investors,and belongs to the category of "culture" construction in the securities market.