Cross-cultural Differences in Risk Perception,but Cross-cultural Similarities in Attitudes Towards Perceived Risk
Christopher K. Hsee
University of Chicago - Booth School of Business
Elke U. Weber
Columbia Business School - Management & Psychology
Management Science, Vol. 44, No. 9, 1998
In this study, respondents from the P.R.C., U.S.A., Germany, and Poland were found to differ in risk preference, as measured by buying prices for risky financial options. Chinese repondents were significantly less risk-averse in their pricing than Americans when risk preference was assessed in the traditional expected-utility framework. However these apparent differences in risk preference were associated primarily with cultural differences in the perception of the risk of financial options rather than with cultural differences in attitude towards perceived risk. In all cultures, and equal proportion(the majority) of respondents was willing to pay more for options perceived as less risky, i.e., were perceived-risk averse. These results are most natually explained within a risk-return conceptualization of risky choice. They have practical implications for cross-cultural negotiation and commerce by suggesting the locus of cultural differences in risky choice that may allow for the creation of joint gains.
Number of Pages in PDF File: 14
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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