Behavioral finance models effects individual investors risk preference : An analysis socio economic and demogfaphic factors

In the period of taking investment decisions, there are many variables. Although investors try to take rational decisions, these decisions might not be always rational. The biggest critique of Modern Finance Theory, which asserts investment decisions are always made rational, is the probability of some psychological processes that affecting rationality of investment decisions. Therefore each investment decision is not rational because of some psychological reasons. Theory that investigates the impact of psychological processes underlying investment decisions is the Behavioral Finance Theory. The main aim of this work is to reveal how social, economic and individual factors influence risk preferences of individual investors. This research will be conducted practically on the investment decisions of an investment company in the light of behavioral finance models. Individual investors make portfolio investments apart from other alternatives in order to increase their gains. Freguently, these investments have different risk levels and investors make portfolio investments by evaluating those risks. In the process of taking risky investment decisions like portfolio choice and diversification, individual investors decide under the influence of many different factors. Those are social and economic factors such as income level, age, gender, education level, marital status and quality and quantity level of the profession. This research is constructed to investigate demographic, social and economic factors which might be effective on the risk tendencies of individual investors transacting in Borsa İstanbul (BIST) with its current name. The analyses within this framework demonstrated that risk perceptions of individual investors in the process of portfolio investments have been affected from the factors mentioned above, with the exception of marital status.