Cause of Formation and Prevention of Financial Risk from the Perspective of Behavioral Economics

Financial risk mainly roots in irrational behavior of stakeholders besides external macroeconomic factors,especially irrational behavior of managers and investors.From the perspective of behavioral economics,the actors' cognitive biases in decision-making in uncertain condition lead to irrational behavior.They have important influence on enterprises' decision making.They can make decisions non optimal,bring financial risk and damage enterprise value.We should keep irrational behavior away to lower irrational behavior.