The impact of behavioral finance trends on risk taking: The example of Istanbul province

Classical finance theorists accept that individuals act rationally when making investment decisions. In this direction, classical finance theorists argue that the investor will ignore human characteristics and prefer the most reasonable investment alternative. The classical finance theory, which is especially based on the expected utility theory, emphasizes that every investor should perceive the risk factor at the same level and emphasizes that the expected utility should be maximized. Behavioral financiers, on the other hand, argue that, contrary to the classical approach, investors do not always make rational decisions, however, the expected return from investment and the level of tolerable risk are very different from each other, and they emphasize that individuals show irrational tendencies in their investment decision-making processes under the influence of cognitive and psychological biases. With this study, it is aimed to reveal the effect of behavioral finance tendencies on the level of risk taking. For this purpose, a data collection tool consisting of a demographic questionnaire, Behavioral Finance Scale and Risk Taking Level Scale was applied to 250 participants. Research findings were evaluated with correlation, multivariate regression model, t-test and anova using SPSS. As a result of the analysis, it was determined that behavioral finance tendencies and risk tolerance did not differ statistically significantly according to the demographic characteristics of individuals.