CROSS-CULTURAL DIFFERENCES IN RISK PERCEPTION - A MODEL-BASED APPROACH

The present study assessed cross-cultural differences in the perceptio n of financial risks. Students at large universities in Hong Kong, Tai wan, the Netherlands, and the U.S., as well as a group of Taiwanese se curity analysts rated the riskiness of a set of monetary lotteries. Ri sk judgments differed with nationality, but not with occupation (stude nts vs. security analysts) and were modeled by the Conjoint Expected R isk (CER) model.((1)) Consistent with cultural differences in country uncertainty avoidance,((2)) CER model parameters of respondents from t he two Western countries differed from those of respondents from the t wo countries with Chinese cultural roots: The risk judgments of respon dents from Hong Kong and Taiwan were more sensitive to the magnitude o f potential losses and less mitigated by the probability of positive o utcomes.