Study on Catastrophe Bond Pricing Model Based on Behavioral Finance

As a developing nation, China should develop perfect catastrophe insurance system to ensure stabilization of society and development of economy. But characteristics of catastrophe insurance breach basic guide line of conventional insurance-the law of the great number, and then lacking risk transferring approach let insurance agents be unwilling to develop catastrophe insurance. Catastrophe bond is a new underwriting risk transferring approach. China has basal conditions to develop catastrophe bond. But studies on correlative theories of catastrophe bond hang behind in China. Study on catastrophe bond pricing model is the most important in correlative studies. So after considering roundly catastrophe bond´s attributes of insurance production and venture capital production, the paper wants to amend the catastrophe bond pricing model that is constructed under risk pricing frame of standard finance by using behavioral finance method. On the base, the paper constructs catastrophe bond pricing model of China according to the situation of china at last. The author hopes that the paper can advance studies on correlative theories of catastrophe bond and let catastrophe bond be issued as soon as possible in China.