The Relation of Individual Investor's Psychologies: A System Dynamics Approach

Investor's psychology is an important research field in financial market. In the past thirty years, economists have discovered a lot of valuable laws on investor's psychology in financial market, which enhance our knowledge of the internal disciplines of financial market and promote a new financial paradigm of behavioral finance form. The paper summarizes the present research findings in investor's psychology and some applications in researching financial anomalies with these findings. Then the paper analyzes mutual relation of the main investor's psychological characteristics from a system dynamics approach. Based on the analysis the paper generalizes the main psychological characteristics of individual investor from the perspective of investor emotion and cognition, which are deep-rooted and inner.