Culture, Conformity, and Risk Attitudes: An Experimental Analysis

Abstract

This paper applies cultural differences in conformity to the context of risk attitudes. Study One compared East Asian and British students. Using a salient lottery choice task, with and without observation of peers, Study One revealed no effect of peer observation on the East Asian students’ choices. However, the British students were inclined to choose against the majority of their peers. This behaviour is consistent with an individualist culture that places value on uniqueness. Study Two was intended to replicate the results from Study One, using a more diverse population of East Asians and Australians, including non-students. Study Two found East Asians were more likely to choose in-line with the majority of their peers when the size of the majority increases, while no such effect was found for Australians.

Keywords: culture, conformity, risk attitudes, experimental economics

JEL Classification: D81, Z13