Abstract
The fluctuations of capital market mainly originate from the volatility of asset price. How to understand and describe the volatility of asset price is meaningful for both the finance theory and the finance application. The attribute of investor's subjective behavior makes marked effect on asset price. This paper sets the equilibrium price of stock in capital market as a function of subjective discount factor, relative-risk-aversion coefficient, and habitual parameter, and researches the effects of the investor's behavioral parameter's fluctuations on volatility of asset price with the method of numerical simulation. The simulation outcome reveals that a little fluctuations of investor's behavioral parameter result in big fluctuations of stock price in China.
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