Cross-National Differences in Risk Preference and Lay Predictions
Christopher K. Hsee
University of Chicago - Booth School of Business
Elke U. Weber
Columbia Business School - Management & Psychology
Journal of Behavioral Decision Making, Vol. 12, 1999
This research explores whether there are systematic cross-national differences in choice-inferred risk preferences between Americans and Chinese. Study 1 found(a) that the Chinese were signi®cantly more risk seeking than the Americans, yet(b) that both nationals predicted exactly the opposite Ð that the Americans wouldbe more risk seeking. Study 2 compared Americans' and Chinese risk preferences in investment, medical and academic decisions, and found that Chinese were more risk seeking than Americans only in the investment domain and not in the other domains. These results are explained in terms of a cushion hypothesis, which suggests people in a collectivist society, such as China, are more likely to receive fnancial help if they are in need (i.e. they could be cushioned if they fell), and consequently, they are less risk averse than those in an individualistic society such as the USA.
Number of Pages in PDF File: 15
Keywords: risk preference, risk attitude, cultural difference, China
JEL Classification: D81, D11, D12, D91Accepted Paper Series
Date posted: October 11, 2006
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