A Probe into the Risk Preference of Investors in Behavioral Finance

Behavior finance is based on the suspicion of the hypothesis about rational prospect,risk evasion and maximum utility in the modern classical financial theory.Facing the anomalies in financial markets that the modern classical financial theory cannot fully explain and using the research achievements in psychology,behavior science,and sociology,behavioral finance argues that individual investors have different decision-making preferences faced with uncertainties because of their different cognitive ways and evaluation mechanism.Therefore,the investors are not always rational,their behavior often embodies the variety of non-Bayesian Rules' expectation,risk seeking and multifarious prospect.The theory is expected to provide support for the policy makers to frame rules and regulations for the non-matured stock market in China.