The relationship between social memory and framing bias in financial investment decisions

Behavioral economics is a rapidly developing field and the number of studies in the field is increasing day by day. Behavioral economics, which argues that individuals cannot behave as rational individuals when making decisions under uncertainty, suggests that individuals' decision-making processes are affected by cognitive biases. Individuals who are far from the concept of rationality due to human nature may make mistakes by making some prejudices in decision-making situations. In addition, individuals may also be influenced by social factors in their economic decision-making processes. In this context, social memory, which is suggested to shape individual behavior in the literature, is thought to affect the decision-making process of the irrational individual and may be effective on the decision biases of the individual. As a matter of fact, it is mentioned in the literature that biases such as familiarity bias, loss aversion, confirmation bias, herd behavior, regret avoidance, excessive optimism framing bias in periods of uncertainty may be related to the memory studies proposed by Daniel Kahneman. In this context, the aim of the current study is to evaluate the relationship between social memory and investor behavior through framing bias. The method applied in the current study is a survey-based choice experiment. In the study, three different groups were primed and asked questions about framing bias and investment decisions. The results were analyzed using the chi-square method. The final result of the study did not reveal a relationship between social memory and investment decisions. However, it was observed that all three groups were influenced by framing bias in their investment decisions. As a matter of fact, the main limitation of this study is that there is no clear study on the concept of social memory and behavioral economics in the literature. However, it is thought that this study will complement this gap in the literature and the study also provides suggestions for future studies.