Cross-National Differences in Risk Preference and Lay Predictions

Journal of Behavioral Decision Making, Vol. 12, 1999

15 Pages Posted: 11 Oct 2006  

Christopher K. Hsee

University of Chicago - Booth School of Business

Elke U. Weber

Columbia Business School - Management & Psychology

Abstract

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.

Keywords: risk preference, risk attitude, cultural difference, China

JEL Classification: D81, D11, D12, D91

Suggested Citation

Hsee, Christopher K. and Weber, Elke U., Cross-National Differences in Risk Preference and Lay Predictions. Journal of Behavioral Decision Making, Vol. 12, 1999. Available at SSRN: https://ssrn.com/abstract=930081

Christopher K. Hsee (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Elke U. Weber

Columbia Business School - Management & Psychology ( email )

3022 Broadway
New York, NY 10027
United States

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