BİREYSEL YATIRIMCILARIN FİNANSAL RİSK ALGISINA ETKİ EDEN PSİKOLOJİK ÖNYARGILAR

Abstract

Recent research on finance indicate that although individual investors want to rationally maximize their choices, diversify their portfolios and avoid risks in their investment decisions, they fail to do so in their real life investment. Thus, it can be asserted that human behavior is not always based on a rational foundation and can systematically diverge from rationalization. In financial markets, there are many factors that limit or direct individual investors or stop them from behaving rationally when they invest with the aim of protecting their capital, to ensure value increase and to have continuous income. One of these factors is psychological bias. As a result of psychological biases, individual investors can sell winning share stocks earlier than the right time while keeping the losing share stocks for too long, and accordingly, they too often operate at a loss due to over-confidence. Moreover, they emotionally get attached to familiar financial tools, they exhibit herd behavior, and they tend to collect information supporting their opinion while denying other information that could be useful. In other words, the investment decisions of individuals are not rational decisions any more but instead they are based on individuals’ intuitions and emotions. This compilation study deals with psychological factors that affect the financial risk perception of individual investors and the reflections of such factors onto their investment decisions in detail.

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