| When studying investor's investment behavior, the classical and mainstream finance theories taking effective marketplace theory as the basis of the finance theories, it suppose that the market is fully effective and the investors are rational ,then analyze that what investors should do to make themselves get maximum benefits. But many empirical studies show that, because of investors' psychological biases, people are not always fully rational. The real Investment decision-making process and decision-making result are very different from the optimal decision models in the mainstream finance theories; this is showed by various financial anomalies. And behavioral finance theories break the limitation of the mainstream finance theories, taken the psychological research into the analysis of securities investors' behavior and pointed out that the investors are bounded rational. On this basis, the study to investor's investment decision-making is developed.The well-known scientist of Behavioral Finance Kahneman argue that by quoting the decision-making theorist-Howard Raiffa's concept, investment researches should be divided into the following three categories:1.Normative analysis, it is concerned with the rational solution to the decision problem. It defines the ideal that actual decisions should strive to approximate.2. Descriptive analysis, it is concerned with the manner in which real people actually make decisions.3. Prescriptive analysis it is concerned with practical advice and help that people could use to make more rational decisions. In the framework of rational analysis within traditional finance ,as a decision-making criteria and decision-making objectives, the "expected utility maximization" criterion itself is a "practical recommendations of rational decision-making", It will automatically approximate the ideal values of "social welfare maximization" which is desired by "normative analysis".This means that,In the framework of rational analysis within traditional finance, there is no difference between "normative analysis" and "indicative analysis", but Kahneman believe that "There is no theory is both normatively appropriate and descriptive on the right again", Behavioral finance theory is closer to the "descriptive analysis" and "indicative Analysis". The paradigm of this article is "descriptive" and "indicative". The purpose of this article is that, by summarizing and combing behavioral finance research on the psychological bias and making it combines with investment of investors, make investment advice to investors of China's Stock Market.The paper can be divided into four parts:The first part is the conclusion of the theory, based on the results of comprehensive research in the field of behavioral finance at home and abroad, the author summarizes and comb behavioral finance research on the psychological bias.In the second part, the author analyzes Warren Buffett's investment behavior and thinking according to the foregoing summary of the outcome of behavioral finance theory.In the third part, the author analyzes some non-rational phenomena in China's Stock Market, and makes investment advice to stock investors of China's Stock Market.In the fourth part, the author makes investment advice to stock investors of China's Stock Market according to the research contents of the preceding chapters. |
