Why does stock price always behave like a roller coaster? A glimpse from the perspective of disposition effect and herd behavior

摘要

This study aims at when the new information appears in the stock market under the interaction influence of disposition effect and herd behavior, how the stock price will change? Taking these two common investor's psychological phenomena into consideration, I follow the track of pervious researches mainly aims at the interaction of these two phenomena in stock market. As a result, I found the disposition effect cause lag of time of the price reaching the actual value price in the fluctuation of stock market principally. The herd behavior stimulating the market to break though the actual value price and reach a higher price. I also noticed that these two different psychological phenomena may have a same trigger which is the regret aversion. This standpoint is helpful for investors to avoid traps in the stock market and make decisions more precisely.