Dealing with Uncertainty: American and Chinese Cultural Influence On Ambiguity Aversion in Economic Decision-Making
Date of Submission
Campus Only Senior Thesis
Bachelor of Arts
Although Chinese and American cultures have been well-studied along dimensions such as collectivist versus individualist orientation, less is known about how culture influences individual economic decision-making. Here we examined cultural influences on decisions involving risk, characterized by unknown outcomes but known underlying probability distributions, versus ambiguity, in which both the outcome and distribution of possible outcomes are unknown. Based on previous research using self-reported survey data, we hypothesized that Chinese decision makers may be more ambiguity-averse than Americans. College students from mainland China (N = 27) and North America (N = 27) performed a standard economic decision-making task, choosing between a certain payoff and a gamble. Gambles varied in the magnitude of the payoff and in the degree of risk (13%, 25%, 38%, 50% or 75% probability of winning) or ambiguity (24%, 50% or 74% probability unknown). Using the proportion of risky and ambiguous gambles accepted, ambiguity and risk aversion coefficients were calculated separately for each participant. Following the main task, participants completed demographic surveys and personality measures including the Big Five Inventory and the Need for Cognitive Closure Scale. We found that variation in risk aversion was explained by personality factors of Neuroticism and Decisiveness, without respect to cultural group. In contrast, after controlling for differences in personality measures, for ambiguity aversion only the effect of cultural group was significant, with Chinese participants showing greater ambiguity aversion than Americans. By assessing individual decision behavior using experimental economic methods, our results provide a more complete picture of the role of culture in economic choices under risk versus ambiguity.
Fu, Yifan, "Dealing with Uncertainty: American and Chinese Cultural Influence On Ambiguity Aversion in Economic Decision-Making" (2018). CMC Senior Theses. 1897.
This thesis is restricted to the Claremont Colleges current faculty, students, and staff.