Affiliation:
1. 1 Yildiz Technical University , Faculty of Economics and Administrative Sciences/Business Department , Turkey
2. 2 Yildiz Technical University , Faculty of Economics and Administrative Sciences/Business Department , Turkey
Abstract
Abstract
Research background
Deciding to trade in financial markets is psychologically difficult and wearing. Investors want to find rational justifications for the correctness of their decisions. However, there is uncertainty in financial markets. This uncertainty does not allow for mathematical calculations. In such case, feelings get involved in the decision process.
Purpose
This study aimed to investigate the mediating effect of two motivational systems (loss aversion and pleasure-seeking) on the effect of phantasy, which is fantasies that are based on an individual’s early infancy, that develop and exist throughout life, but are not consciously aware of by the individual, on financial risk tolerance, and to analyze the moderating effect of confidence in the effect of these two motivational systems on financial risk tolerance.
Research methodology
Data were collected from 1,643 subjects from Turkey in November–December 2021 using a questionnaire. The link to the survey prepared by the researchers was created using Google Survey and shared by our graduates’ students on their social networks.
Results
According to the results, phantasy had a positive and significant effect on both motivational systems and financial risk tolerance. Simultaneously, two motivational systems have a mediating effect on the relationship between phantasy and financial risk tolerance. Confidence, on the other hand, has a moderating effect on the effect of these two motivational systems on financial risk tolerance. In addition, as expected, phantasy showed its effect on all individuals without differing according to demographic variables. Despite this, loss aversion and low financial risk tolerance were higher in female and married individuals. While pleasure-seeking is higher in males, it does not differ according to marital status.
Novelty
Modeling unconscious processes, motivational systems and individual characteristics such as confidence together will provide important and useful findings for both investors and market authority in terms of showing the effect of unconscious and cognitive factors on financial risk tolerance.
Subject
General Economics, Econometrics and Finance,Organizational Behavior and Human Resource Management,Marketing,Business, Management and Accounting (miscellaneous)
Reference75 articles.
1. Alba, J.W., Williams, E.F. (2013). Pleasure principles: A review of research on hedonic consumption. Journal of Consumer Psychology, 23(1), 2–18. DOI: 10.1016/j.jcps.2012.07.003.
2. Aren, S. (2019). Conceptual Framework of Emotional Finance A New Approach to The Understanding Financial Crisis and Balloons. Journal of Aksaray University Faculty of Economics and Administrative Sciences, 11(3), 11–16.
3. Aren, S., Köten, B. (2019). The Effects of Emotions on Risk Aversion Behavior. Journal of Life Economics, 6(4), 421–436. DOI: 10.15637/jlecon.6.026.
4. Aren, S., Hamamcı, H.N. (2021a). Emotional Finance: Determinants of Phantasy. Kybernetes, 50(5), 1250–1276. DOI: 10.1108/K-02-2020-0084.
5. Aren, S., Hamamcı, H.N. (2021b). Moderation Effect of Pleasure Seeking and Loss Aversion in The Relationship Between Personality Traits and Risky Investment Intention. Kybernetes, 50(12), 3305–3330. DOI: 10.1108/K-05-2020-0278.