A cross-cultural study of reference point adaptation: Evidence from China, Korea, and the US

• Published in: Organizational behavior and human decision processes Vol. 112; no. 2; pp. 99 - 111
• Main Authors: Arkes, Hal R., Hirshleifer, David, Jiang, Danling, Lim, Sonya S.
• Format: Journal Article
• Language: English
• Published: Kidlington Elsevier Inc 01.07.2010; Elsevier; Elsevier Science Publishing Company, Inc
• Series: Organizational Behavior and Human Decision Processes
• Subjects: Adaptation; American people; Applied psychology; Asians; Biological and medical sciences; China; Comparative analysis; Cross Cultural Studies; Cross-cultural analysis; Cross-cultural differences; Cultural Differences; Decision making; Evidence; Experiments; Foreign Countries; Fundamental and applied biological sciences. Psychology; Incentives; Interkulturelle Beziehungen; Kapitaleinkommen; Korea; Mental accounting; Miscellaneous; Money; Motivation; Prospect Theory; Prospect theory Cross-cultural differences Reference point adaptation Mental accounting Security trading; Psychology. Psychoanalysis. Psychiatry; Psychology. Psychophysiology; Questionnaires; Reference point adaptation; Sales; Securities trading; Security trading; Südkorea; Trade; Trade theory; Trading; U.S.A; United States; USA; Vergleich; Verlust; Wertpapierhandel; United States; South Korea; China; Asia; North America; America; Korea; United States > US; Cross-cultural differences; Reference point adaptation; Prospect theory; Security trading; Mental accounting; Social environment; Human; Crosscultural study; Cultural environment; Commerce; Safety
• ISSN: 0749-5978; 1095-9920
• DOI: 10.1016/j.obhdp.2010.02.002

We examined reference point adaptation following gains or losses in security trading using participants from China, Korea, and the US. In both questionnaire studies and trading experiments with real money incentives, reference point adaptation was larger for Asians than for Americans. Subjects in all countries adapted their reference points more after a gain than after an equal-sized loss. When we introduced a forced sale intervention that is designed to close the mental account for a prior outcome, Americans showed greater adaptation toward the new price than their Asian counterparts. We offer possible explanations both for the cross-cultural similarities and the cross-cultural differences.