Davranışsal finans ve finansal krizler arasındaki ilişki

Behavioral economics focuses on explaining the irrationality of the people's behavior. Behavioral economists expand and advance the conventional ideas with models on decision-making that is adapted with a multidisciplinary approach owing to psychology. Pursuant to the standard economic approach, decisions are made in the context of an exhaustive knowledge of their preferences and their choices are rational. The approach of the behavioral economics shed light on a new study that is called as Behavioral Finance. It focuses on the irrational behaviors of people's investing decisions. The irrational behaviours of the investors might have a relationship with the price bubbles that triggers the financial crisis. Therefore, the relationship between financial crisis and individual behaviors shall be examined. This thesis argues and examines the relationship between behavioral finance and the financial crisis. The research on the investment behaviors is shown that extrapolation error have an important role for decision making. This process is surrounded by imperfect knowledge. Therefore, people have a high tendency to make forecasts for the next step as a result of previous data in time series. It is believed that an unexpected situation might not occur. In order to see that empirical research is conducted with a simulation to see forecasting behavior of people. The research showed that people make a forecast in parallel with the previous changes. It is a visible point of extrapolation error.