Cross-national Differences in Risk Preference and Lay Predictions

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 significantly more risk seeking than the Americans, yet (b) that both nationals predicted exactly the opposite—that the Americans would be 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 financial 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. Copyright © 1999 John Wiley & Sons, Ltd.