Empirical research on prospect theory and cost function

Valuation is the core of study on finance.The development of Behavioral Finance has changed the valuation rule from expected utility theory to prospect theory. The paper carries on an empirical analysis on prospect theory based on the data from China's stock markets and discovers that investing psychology of Chinese shareholders accords with prospect theory.It also builds up cost function equation,and estimates the accurate expression form of cost function based on the data from the stock market,which will provide a quantitative theoretical rule for the asset valuation.