An Empirical Study of Individuals’ Investment Decision Anomalies and Heuristics
Behavioral finance argues that individuals are not rational while making investment decisions due to some psychological, exogenous, and other factors. As a result, they end up making poor financial decisions. This study was conducted to determine factors that individual investors are exposed to whil...
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| Format: | Article |
| Language: | English |
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Istanbul University Press
2022-01-01
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| Series: | İktisat Politikası Araştırmaları Dergisi |
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| Online Access: | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/736D4B3064084752B24B7F37BEB7DBF3 |
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| _version_ | 1850190329849839616 |
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| author | Batuhan Medetoğlu Arif Saldanlı |
| author_facet | Batuhan Medetoğlu Arif Saldanlı |
| author_sort | Batuhan Medetoğlu |
| collection | DOAJ |
| description | Behavioral finance argues that individuals are not rational while making investment decisions due to some psychological, exogenous, and other factors. As a result, they end up making poor financial decisions. This study was conducted to determine factors that individual investors are exposed to while making investment decisions. A questionnaire was handed over to 532 participants as part of the study. The Statistical Package for the Social Sciences (SPSS) program was used to conduct the analysis. Questionnaire responses were first subjected to factor analysis, and later, reliability analysis was conducted to determine which factors were the most effective in participants’ investment decisions. The reliability levels of the factors in the study were observed to be above the determined limits. The factors were shown to exhibit a significant and positive relationship. According to the results obtained, factors that affect investor decisions were grouped into three categories, namely, exogenous factors and herd behavior; cognitive illusions; and demographic and socioeconomic factors. Exogenous factors and herd behavior demonstrate situations that occur independently of investors, cognitive illusions demonstrate how psychological factors affect investors, and demographic and socioeconomic factors demonstrate how characteristics influence investors’ attitudes. Consequently, situations that affect investment decisions of investors were also grouped under three factors and findings concerning investor behaviors were explained. It was determined that the factors obtained in the study reflect and explain the situations that individuals are exposed to while making investment decisions. A majority of the participants are in the same age range, which is one of the study’s limitations. The use of diverse age groups in future research is suggested. |
| format | Article |
| id | doaj-art-9e6a6d64618749a281bb2b4f39726e9f |
| institution | OA Journals |
| issn | 2148-3876 |
| language | English |
| publishDate | 2022-01-01 |
| publisher | Istanbul University Press |
| record_format | Article |
| series | İktisat Politikası Araştırmaları Dergisi |
| spelling | doaj-art-9e6a6d64618749a281bb2b4f39726e9f2025-08-20T02:15:19ZengIstanbul University Pressİktisat Politikası Araştırmaları Dergisi2148-38762022-01-0191537410.26650/JEPR936253123456An Empirical Study of Individuals’ Investment Decision Anomalies and HeuristicsBatuhan Medetoğlu0https://orcid.org/0000-0002-8400-1232Arif Saldanlı1https://orcid.org/0000-0001-9990-9510İstanbul Ayvansaray Üniversitesi, Istanbul, Turkiyeİstanbul Üniversitesi, İstanbul, TürkiyeBehavioral finance argues that individuals are not rational while making investment decisions due to some psychological, exogenous, and other factors. As a result, they end up making poor financial decisions. This study was conducted to determine factors that individual investors are exposed to while making investment decisions. A questionnaire was handed over to 532 participants as part of the study. The Statistical Package for the Social Sciences (SPSS) program was used to conduct the analysis. Questionnaire responses were first subjected to factor analysis, and later, reliability analysis was conducted to determine which factors were the most effective in participants’ investment decisions. The reliability levels of the factors in the study were observed to be above the determined limits. The factors were shown to exhibit a significant and positive relationship. According to the results obtained, factors that affect investor decisions were grouped into three categories, namely, exogenous factors and herd behavior; cognitive illusions; and demographic and socioeconomic factors. Exogenous factors and herd behavior demonstrate situations that occur independently of investors, cognitive illusions demonstrate how psychological factors affect investors, and demographic and socioeconomic factors demonstrate how characteristics influence investors’ attitudes. Consequently, situations that affect investment decisions of investors were also grouped under three factors and findings concerning investor behaviors were explained. It was determined that the factors obtained in the study reflect and explain the situations that individuals are exposed to while making investment decisions. A majority of the participants are in the same age range, which is one of the study’s limitations. The use of diverse age groups in future research is suggested.https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/736D4B3064084752B24B7F37BEB7DBF3financebehavioral financeinvestment decisionsanomaliesheuristic |
| spellingShingle | Batuhan Medetoğlu Arif Saldanlı An Empirical Study of Individuals’ Investment Decision Anomalies and Heuristics İktisat Politikası Araştırmaları Dergisi finance behavioral finance investment decisions anomalies heuristic |
| title | An Empirical Study of Individuals’ Investment Decision Anomalies and Heuristics |
| title_full | An Empirical Study of Individuals’ Investment Decision Anomalies and Heuristics |
| title_fullStr | An Empirical Study of Individuals’ Investment Decision Anomalies and Heuristics |
| title_full_unstemmed | An Empirical Study of Individuals’ Investment Decision Anomalies and Heuristics |
| title_short | An Empirical Study of Individuals’ Investment Decision Anomalies and Heuristics |
| title_sort | empirical study of individuals investment decision anomalies and heuristics |
| topic | finance behavioral finance investment decisions anomalies heuristic |
| url | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/736D4B3064084752B24B7F37BEB7DBF3 |
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