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

TLDR

Respondents from China, the U.S., Germany, and Poland differed in risk preference as measured by buying prices for risky financial options. Chinese respondents were less risk‑averse than Americans, a difference driven mainly by cultural variations in risk perception rather than attitudes, and across all cultures most participants were willing to pay more for options perceived as less risky, underscoring a risk‑return framework that has implications for cross‑cultural negotiation and commerce.

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 respondents 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 the financial options rather than with cultural differences in attitude towards perceived risk. In all cultures, an 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 naturally 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.