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The Impact of Culture on Loss Aversion


Hens, Thorsten; Rieger, Marc O; Wang, Mei (2017). The Impact of Culture on Loss Aversion. Journal of Behavioral Decision Making, 30(2):270-281.

Abstract

Based on the literature on the relationship between culture, emotion, and loss aversion, we derive that culture can influence the degree of loss aversion. To test our hypotheses, we conduct a standardized survey in 53 countries worldwide that includes the questions from the Hofstede survey on cultural dimensions as well as lottery questions on loss aversion. The results show that individualism, power distance, and masculinity increase loss aversion as predicted, whereas the impact of uncertainty avoidance is less significant. Moreover, we also find a relation between the distribution of major religions in a country and loss aversion. In comparison, the connection of loss aversion to macroeconomic variables seems to be much smaller.

Abstract

Based on the literature on the relationship between culture, emotion, and loss aversion, we derive that culture can influence the degree of loss aversion. To test our hypotheses, we conduct a standardized survey in 53 countries worldwide that includes the questions from the Hofstede survey on cultural dimensions as well as lottery questions on loss aversion. The results show that individualism, power distance, and masculinity increase loss aversion as predicted, whereas the impact of uncertainty avoidance is less significant. Moreover, we also find a relation between the distribution of major religions in a country and loss aversion. In comparison, the connection of loss aversion to macroeconomic variables seems to be much smaller.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:April 2017
Deposited On:22 Nov 2017 14:17
Last Modified:19 Feb 2018 09:22
Publisher:Wiley-Blackwell Publishing, Inc.
ISSN:0894-3257
OA Status:Closed
Publisher DOI:https://doi.org/10.1002/bdm.1941
Related URLs:http://onlinelibrary.wiley.com/doi/10.1002/bdm.1941/abstract (Publisher)
Other Identification Number:merlin-id:13242

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