Analysis of the Formation Path of Investors' Risk Perception Bias and Its Impact on Decision-Making Efficiency

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Authors: Xiao Man
Cited by: 0
References: 5

Abstract

In the capital market, the efficiency of investor decision-making is directly related to the efficiency of resource allocation and the smooth operation of the market. Risk perception bias, as a common systemic phenomenon in investor decision-making, is not an accidental product, but the result of the interaction between individual cognitive traits and external environmental factors. This article is based on the theoretical frameworks of behavioral finance and cognitive psychology, systematically deconstructing the formation logic and evolutionary path of this bias, analyzing the core driving mechanism from the dual dimensions of individual cognition and external environment, and exploring its multidimensional impact on decision-making timeliness, accuracy, and rationality. Research has shown that individual cognitive limitations, information asymmetry, and social interaction effects are the core driving factors for bias formation, and this bias significantly weakens investor decision-making efficiency by distorting the risk assessment system, interfering with the internal logic of decision-making, and exacerbating market irrational behavior. The research conclusion of this article provides theoretical reference and practical inspiration for investors to optimize decision quality and regulatory authorities to improve market mechanisms.

Fields of Study & Subjects

Financial Markets and Investment Strategies Decision-Making and Behavioral Economics Financial Literacy and Behavior

Publication details

Journal / source
International Journal of Finance and Investment
Volume
5
Issue
1
Pages
1–4
Publication date
30 January 2026