Impact of the psychological state of an individual on trust, status quo bias and herd behavior in the course of economic decision making

It has always been an object of interest to understand the factors that affect people when making a decision. Does a person act really rationally when making a decision or are they not always able to act rationally? Are there certain factors that affect people when purchasing goods or services or while making a decision even if it is the simplest one? These types of questions are analyzed in the field of social sciences, especially within the framework of behavioral economics. During the studies in the field of social sciences in recent years, the question "How rationally does a person act while making a decision?" has been highlighted. A great number of phenomenon has arisen when psychological concepts are included into the analyses carried out in the field of social sciences. Research made in this field suggests that there are many phenomenon that affect an individual during the process of making a decision. This thesis is intended to analyze the impact of the personality traits, and the level of depression and concern of individuals on the risk and trust relationship, status quo bias and herd behavior that have an influence on the process of making an economic decision. For this study, in order to identify the level of impact of the psychological state of individuals on their decision-making process, experimental research was made on 60 individuals randomly selected among the students of the Department of Economics, the Faculty of Economics and Administrative Sciences, Aksaray University. Package software of SPSS 22.0 and Eviews 10.0 were made use of to analyze the findings. Further, the program WEKA 3.8.3 was used for the decision tree algorithm, one of data mining methods. For the creation of the decision tree, the algorithm C4.5 (J48) was used and, the decision rules were created for economic decisions. It is the secondary purpose of this study to bring a new perspective to the literature in this manner. The results suggest that individuals give rewards for the trust placed on them. It was found that individuals tend to act within the framework of status quo when they are offered more than one and many options. It was concluded that this is because of information overload. Further, it was found how individuals tend to maintain the status quo in case of small change in the story presented to them. Key Words: Behavioral Economics, Experimental Study, Decision Tree, Risk and Trust Relationship, Status Quo Bias, Decision Making Behavior