Empirical Analysis of Prospect Theory under Chinese Market Condition

It is very important to describe the characters of investors' decision preference accurately not only in theory but also in practice.Based on Stochastic Dominance Theory,an empirical analysis from China's security market is shown that our national investors as a whole have characteristics of prospect theory.In a bull market,risk aversion investors have a preference to risk-free assets,and in bear market,risk loving investors prefer to risk assets.In a word,the investors' behavior in China is accordance with the prospect theory.