INVESTOR PSYCHOLOGY ANALYSIS BY HERD CYCLE MOVEMENT APPROACH

Year 2019, Volume: 2 Issue: 2, 33 - 52, 25.12.2019

Şaban Onur Viga Turgut Özkan

Abstract

In traditional finance theories, human beings are considered rational, while Modern Finance Theories are considered irrational. The "Behavioral Finance Theory" explains that the social environment and behavior affect investors ' making irrational decisions. In this study, the relationship between the "Herd Circle Movement Approach" presented to the literature for the first time and the behaviors affecting investors ' investment decisions from the perspective of the investors was examined. It is aimed to contribute to the development of behavioral finance. Data of the research as constituting the mass of financiers engaged in brokerage houses on the Istanbul Stock Exchange and the New York Stock Exchange reviewed the application. The survey responses as a result of "over-confidence" have been determined to be exhibiting the behavior of a mass. Among the findings of the study, it was determined that investors using the mental accounting power in their investments could be more dominant to them and that there was a positive interaction between the illusion of knowledge and illusion of control and investors who were aware of the herd movement did not show excessive optimism.

Keywords

Behavioral Finance, Investor Phycology, Stock Market

INVESTOR PSYCHOLOGY ANALYSIS BY HERD CYCLE MOVEMENT APPROACH

Abstract

In traditional finance theories, human beings are considered rational,
while Modern Finance Theories are considered irrational. The "Behavioral
Finance Theory" explains that the social environment and behavior affect
investors ' making irrational decisions. In this study, the relationship
between the "Herd Circle Movement Approach" presented to the
literature for the first time and the behaviors affecting investors '
investment decisions from the perspective of the investors was examined. It is
aimed to contribute to the development of behavioral finance. Data of the
research as constituting the mass of financiers engaged in brokerage houses on
the Istanbul Stock Exchange and the New York Stock Exchange reviewed the
application. The survey responses as a result of "over-confidence"
have been determined to be exhibiting the behavior of a mass. Among the
findings of the study, it was determined that investors using the mental
accounting power in their investments could be more dominant to them and that
there was a positive interaction between the illusion of knowledge and illusion
of control and investors who were aware of the herd movement did not show
excessive optimism.

Keywords

Behavioral Finance, Investor Phycology, Stock Market

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