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Research on Overall Correlation among Chinese Securities Regulators' Irrational Behaviors——Based on Multi-Dimensional Scaling Analysis

【Authors】
ZHANG Jiaqi, HAO Xuguang
【WorkUnit】
School of Business, University of International Business and Economics, 100029
【Abstract】

This paper uses the psychological questionnaire which includes the scenario elements to collect sample data about dozens of irrational behaviors of Chinese securities regulators in the decision-making process. And by introducing the multi-dimensional scaling of the exploratory data, we discuss the overall association characteristics and laws of the 12 irrational behaviors in a two-dimensional space map. We find that the combination of conjunction fallacy, availability heuristic, anchoring effect, overconfidence and confirmation bias jointly constitute a closely linked irrational behavior cluster. Besides, reflection effect, loss aversion, regret aversion, disposition effect and gambler's fallacy constitute an irrational behavior cluster, and the certainty effect is in the center of the model which also connects the two irrational behavior clusters. Based on the research results, this paper holds that approaching and escaping are two different kinds of irrational behavior patterns in China's securities regulators' decision-making process. These two irrational behavior patterns are obviously different in the level of belief support. In particular, those with the tendency of the approaching-irrational behavior model have a stronger belief to collect information to support their views and believe that they are correct, but when getting rid of negative emotions, those with the escaping irrational behavior patterns may lack faith support, showing no confidence and no sense of security. In addition, the pursuit of deterministic results is consistent with the two irrational behavior patterns of regulators, which constitutes the core of regulatory decision-making.


JEL: G18, G28

【KeyWords】
Securities Regulation, Behavioral Finance, Irrational Behavior, Multi-dimensional Scaling