Abstract: Considering the inherent characteristics of investors’ imitation, herding behavior evolution model in stock market is developed from two dimensions of investors’ self-psychological preference and the effect of neighbors’ behavior based on the behavioral finance theory and complex network theory. By applying theoretical and simulation analysis of the dynamic characteristics of the evolution of herding behavior in stock market, some critical conclusions are drawn as follows. First, the evolution of investor’ behavior is affected by the network structure of stock market and the effect of neighbors preference. Second, the stability of equilibrium states of investors’ behavior dynamics is directly related with the concavity and convexity of the neighbors preference function. Third, connectivity and heterogeneity of the network plays an important role in the evolution of the investment behavior in stock market. Fourth, the evolution equilibrium is barely affected by the initial state of the investors’ behavior. It can be seen that, to some extent, the model and the conclusions effectively elaborate the factors which affect investor’ behavior and describe the internal law of the evolution of herding behavior, so as to offer the supportive theoretical evidence for financial management department to develop policies.

Key words: complex networks, neighbor preferred, herding behavior, evolution model