Abstract:

Abstract     Many theories in social sciences assumed that individuals are rational in making decisions. However, many researchers like Watson, Kahneman, Tversky and Smith claimed that individuals are not rational during decision-making process.  Traditional economy and finance theories discuss whether or not they are rational forming behaviors affecting their financial decisions and behaviors. In the literature of finance, opposing the efficient market theory which assumes that investors are rational in their decisions, there are behavioral finance theories defending the idea that investors are not rational. Behavioral finance is a discipline which tries to determine the behaviors of investors in the market utilizing psychology, sociology and anthropology.        The purpose of this study is to determine the risk-taking behaviors of individual investors. In the theoretical part of the study, the developments in behavioral finance theories have been investigated.  On the other side, in the research part, the main aim is to define the relationship between demographic and social features and risk-taking behaviors. The questionnaire results obtained from individual investors through simple random sampling are evaluated by using chi-square and frequency analysis. As the result of the study, individual investors pointed that having knowledge of securities and the market are the most important determinants for investment. Additionally, “pseudocertainty effect”, investors’ both avoiding and taking risk according to the amount they spared for their investments, is observed. In the study, it is concluded that socio-economic factors and information are effective on risk-taking behavior of investors.

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