Analysis of Changes in Risk Preferences and Decision-Making of Individual Investors from the Perspective of Behavioral Finance

Lingfei Cai

doi:10.54254/2754-1169/2025.19883

Research Article

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Published on 9 January 2025

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Cai,L. (2025).Analysis of Changes in Risk Preferences and Decision-Making of Individual Investors from the Perspective of Behavioral Finance.Advances in Economics, Management and Political Sciences,161,57-61.

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Analysis of Changes in Risk Preferences and Decision-Making of Individual Investors from the Perspective of Behavioral Finance

Lingfei Cai *^,1,

¹ Department of Computer And Mathematical Sciences, University of Toronto, Scarborough, Toronto, Canada

* Author to whom correspondence should be addressed.

https://doi.org/10.54254/2754-1169/2025.19883

Abstract

This study explores the changes in risk preferences of individual investors in response to market fluctuations from the perspective of behavioral finance, and its impact on investment decisions. It was found that individual investors' risk preferences are influenced by various psychological factors including overconfidence, anchoring effect, and loss aversion tendencies. Additionally, market volatility and changes in economic environments significantly affect investors' willingness to accept risks. Through analyzing investment behaviors under different risk preferences, this paper reveals strategies for optimizing investment decision-making processes through education, emotional management, and policy-making. Moreover, the study points out that enhancing market information transparency and innovating investment tools can effectively guide individual investors towards more rational investment choices

Keywords

Behavioral finance, Risk preference, Investment decision, Market psychology, Individual investors

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References

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About volume

Volume title: Proceedings of the 4th International Conference on Business and Policy Studies

Conference website: https://2025.confbps.org/

ISBN：978-1-83558-895-6(Print) / 978-1-83558-896-3(Online)

Conference date: 20 February 2025

Editor：Canh Thien Dang

Series: Advances in Economics, Management and Political Sciences

Volume number: Vol.161

ISSN：2754-1169(Print) / 2754-1177(Online)

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