Effects of Investment Experience on the Stock Investment Task: The Mediating Role of Risk Perception.

Due to the limitations of traditional financial analysis and the non-specificity of laboratory-based gambling tasks, it is difficult for researchers to isolate the independent contributions of risk perception and initial investment experience on novice investors' behaviors. Thus, it is still necessary for researchers to describe the process by which investment experience affects the investment behavior of novice investors by employing the methods of psychological experiments that can control and eliminate these confounding variables in the laboratory. The current study created a stock investment task based on the balloon analogy risk task to simulate the stock market in the laboratory. Two hundred and twenty Chinese college students were recruited as participants. Chain intermediary model analysis showed that initial investment experience influences a novice investor's behavior through risk perception. In addition, risk perception displayed the characteristics of continuity, in which the initial risk perception would affect later risk perception. These results indicate that investment experience does influence investment behavior. Different early investment experiences have correspondingly significant effects on the novice investors' investment behavior through their risk perception. The results also suggest that novice investors can partly correct the effects of their initial investment experience through continuous feedback from the stock market.