Mental Accounting and Risk Perception in the Context of Behavioral Finance: An Empirical Study in Marmara University, Turkey

With the prevalence of behavioral approaches to the consumption – and investment-based decisions of individuals, the mental coding of gains and losses employing the value function of prospect theory has been studied intensively by Thaler (2008), focusing on the process of mental accounting, the set of cognitive operations used by individuals and households to organize, evaluate, and keep track of financial activities. This study analyzes the behaviors of academicians in context of mental accounting and risk-based components. The sampling frame comprises academicians from the Faculty of Business Administration at Marmara University, Istanbul, and the findings show that mental accounting does, indeed, an impact on risk perception. However, the risk perceptions of academicians in terms of financial instruments differ with respect to demographic variables.