Cross-cultural Differences in Risk Perception,but Cross-cultural Similarities in Attitudes Towards Perceived Risk

Management Science, Vol. 44, No. 9, 1998

14 Pages Posted: 11 Oct 2006  

Christopher K. Hsee

University of Chicago - Booth School of Business

Elke U. Weber

Columbia Business School - Management & Psychology

Abstract

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.

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

JEL Classification: D81, D11, D12, D91

Suggested Citation

Hsee, Christopher K. and Weber, Elke U., Cross-cultural Differences in Risk Perception,but Cross-cultural Similarities in Attitudes Towards Perceived Risk. Management Science, Vol. 44, No. 9, 1998. Available at SSRN: https://ssrn.com/abstract=930086

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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