The Assessment of Risk Behavior: A Cross-Cultural Analysis Using the DOSPERT Scale

Itzhak Venezia (Ed.), “Behavioral Finance: Sophistication, Gender, Attention, Media, and Culture Effects on Investor Decisions”, World Scientific Publishing Company, Singapore, pp. 159-180.

19 Pages Posted: 11 Jul 2013 Last revised: 14 Dec 2017

See all articles by Wolfgang Breuer

Wolfgang Breuer

RWTH Aachen University

Jana Kollath

RWTH Aachen University - Department of Decision Theory and Financial Services

Astrid Juliane Salzmann

Catholic University of Lille - IESEG School of Management; RWTH Aachen University - Department of Finance

Ruediger von Nitzsch

RWTH Aachen University - Department of Decision Theory and Financial Services

Date Written: July 11, 2013

Abstract

Using modified versions of the Domain-Specific Risk-Taking (DOSPERT) scale, we conduct surveys among German and Chinese university students. Our tests confirm previous findings that risk taking is indeed domain-specific. More importantly, our results show that differences in risk behavior are attributable more to perceived risk than to expected benefits in the under-lying risk-return framework. Risk behavior is almost entirely predictable by differences in the attitude towards perceived risk, but less so by differences in the subjective evaluation of ex-pected benefits. Additionally, our study measures risk attitude through two distinct method-ologies: on an individual-subject level and on a group-level. We find that the individual-subject risk attitude can lead to inadequate conclusions. Furthermore, our research highlights the relevance of national culture as an important factor for explaining risk-taking propensity. After assessing the group-level risk attitude, a country dummy has considerable explanatory power for risk behavior. This result adds to the emerging literature that focuses on cultural differences for an understanding of risk perceptions and economic behavior in general. Our findings yield substantial support for the “cushion hypothesis” and highlight the usefulness of the cultural dimension of individualism versus collectivism in order to explain risk behavior.

Keywords: risk behavior; risk attitude; risk perception; domain specificity; psychometric scale; culture

JEL Classification: A13, Z10

Suggested Citation

Breuer, Wolfgang and Kollath, Jana and Salzmann, Astrid Juliane and von Nitzsch, Ruediger, The Assessment of Risk Behavior: A Cross-Cultural Analysis Using the DOSPERT Scale (July 11, 2013). Itzhak Venezia (Ed.), “Behavioral Finance: Sophistication, Gender, Attention, Media, and Culture Effects on Investor Decisions”, World Scientific Publishing Company, Singapore, pp. 159-180., Available at SSRN: https://ssrn.com/abstract=2292364 or http://dx.doi.org/10.2139/ssrn.2292364

Wolfgang Breuer

RWTH Aachen University ( email )

Templergraben 55
D-52056 Aachen, 52056
Germany

Jana Kollath (Contact Author)

RWTH Aachen University - Department of Decision Theory and Financial Services ( email )

Templergraben 64
Aachen, 52056
Germany

Astrid Juliane Salzmann

Catholic University of Lille - IESEG School of Management ( email )

Socle de la Grande Arche
1 Parvis de la Defense
Puteaux, Paris 92800
France

RWTH Aachen University - Department of Finance ( email )

Templergraben 64
Aachen, 52056
Germany

Ruediger Von Nitzsch

RWTH Aachen University - Department of Decision Theory and Financial Services ( email )

Templergraben 55
52056 Aachen, 52056
Germany

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