Investigation of the influence of investors' behavioral factors on the formation of bubbles in the securities market

Abstract

The purpose of this study is to analyze the influence of investor behavioral factors on the formation of bubbles in the securities market, with an emphasis on explaining the mechanisms of their occurrence. The paper uses the IMRAD structure (introduction, methodology, results, discussion) to systematize the research and offer a theoretical and empirical explanation of the phenomenon under consideration. The introduction describes the relevance of studying the behavioral aspects of financial markets, since irrational actions of investors often act as catalysts for instability in the market and cause the formation of price bubbles. It is noted that there is a need to study factors such as excessive optimism, fear of lost profits (FOMO), herd feeling and emotional reactions that can lead to significant deviations from the fundamental value of assets. The research methodology is based on conducting an empirical assessment of financial market data, as well as modeling investor behavior using agent models. Data on historical stock market bubbles are used, which allows for a comparative analysis of investor behavior at different times. The use of regression analysis and modeling makes it possible to identify the key behavioral factors that make the greatest contribution to the creation of market deviations. The results section provides key conclusions: it is shown that the existence and development of bubbles is closely related to the behavioral anomalies of investors. The main triggers are irrational expectations of rising asset prices, short-term behavior and insufficient risk assessment. The discussion focuses on the extent to which these results can be used to improve the regulation of financial markets and the behavior of participants, and suggests possible mechanisms to reduce the impact of behavioral factors on market instability. The conclusion sums up the results, emphasizing the importance of behavioral risk management to prevent bubbles in financial markets.