Application of Crowd Thought and Herd Behavior in Economic Investment

Abstract

The human psychology and behavior have a nonnegligible impact on the economic investment process. This paper mainly investigates the impacts of crowd thought and herd behavior on economic investment. First, it is assumed that the investors with herd behavior have a lower return than those without that behavior. Then, several surveys were carried out on the mentality, behavior and returns of Chinese investors. The results show that the investors with herd behavior do not necessarily have a poor return, falsifying the hypothesis; slight herd behavior leads to greater return on investment, but blind herd behavior only suppresses the return; the herd behavior is rooted in investors' uncertainty about information. The research results help to improve the economic investment and investors' psychology.

The Influence of Investors' Perceptions of Stock Influencer Credibility on Herding Behavior With Financial Literacy as a Moderating Variable

“…Motivate investors to imitate their goals to be successful like influencers in investing. Investors want higher returns without higher risks, so herding behavior is a shortcut for investors to invest (Zhang, 2020). Thus the trust of stock influencers influences investors' intention to invest.…”

Using E-GARCH to Analyze the Impact of Investor Sentiment on Stock Returns Near Stock Market Crashes

“…Compared with professional investment institutions, their market analysis ability and risk tolerance are low. It is better to encourage investors to make medium-and long-term value investments to reduce irrational behaviors in the investment process (Antony, 2020;Zhang, 2020). Therefore, in the securities market, adding institutional investors would help to stabilize the market structure.…”