Review of risk tolerances, investment decisions, and overconfidence behaviours of the individual investors: Evidence from Türkiye

Traditional finance approaches, which were developed with the assumption that investors are rational, have been replaced by the behavioural finance approach, which takes into account that individuals are not completely rational in their financial decisions. The behavioural finance approach argues that investors are not always rational and exhibit behaviours based on human psychology other than utility maximisation in their investment decisions, and therefore deviations from optimal investment decisions may be observed. In this study, while the main traditional finance approaches are evaluated, the development of behavioural finance, which responds to the questions that traditional finance is insufficient to answer, the basic studies in behavioural finance and investor behaviours, which have an important place in the behavioural finance literature, are examined. This study focuses on the concept of "Social Finance", which explains the way social interactions shape thoughts and behaviours within the framework of transmission biases, and also focuses on the evolution process of these characteristics, taking behavioural finance teachings one step further and showing a new development in the field of behavioural finance. Social finance contributes to the literature in explaining why macro-cultural characteristics such as moral intuitions and religion affect financial behaviour. The purpose of this study is to examine the relationship between cultural characteristics and financial behaviours. The study examines the relationship between the cultural characteristics of societies and individuals' investment decisions and how they affect these decisions, and the way in which social interactions shape thoughts and behaviours as claimed in social finance. In the study, while evaluating the effect of cognitive biases on the financial decisions of individual investors in Turkey, analyses were also conducted to test the validity of the concept of social finance. The study was conducted with individual investors in 18 different cities in Türkiye to determine the relationship between cultural characteristics and financial and cognitive tendencies of individual investors. The cultural element in the study is represented by the cultural dimensions in Hofstede's Dimensions of Culture study, and the current validity of the cultural dimensions in which Türkiye is included in Hofstede's study has also been evaluated with this study. In the analysis of the thesis, participants' cognitive tendencies and cultural characteristics were cross-analysed and inferences were made regarding the extent of the relationship between them. Within the framework of the results obtained, the relationship between certain cultural dimensions and cognitive tendencies has been determined and inferences have been made on the validity of the concept of social finance and that investor behaviours can be examined as social behaviours rather than individual behaviours. Based on the fact that Social Finance analyses the cultural evolution of financial characteristics, the transmission biases that shape this process and the resulting market dynamics, the impact of cultural characteristics on financial decisions has been investigated and the impact of cultural characteristics on financial decisions has been determined in the light of the results obtained.