Extending prospect theory cross-culturally by examining switching behavior in consumer and business-to-business contexts |
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Authors: | Roger Marshall Tzung-Cheng Huan Yingzi Xu Inwoo Nam |
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Affiliation: | a Auckland University of Technology, School of Business, 46 Wakefield Street, Auckland 1010, New Zealandb College of Management, National Chayi University, 580, Hsin-Ming Rd., Chiayi, Taiwan 600c Department of Business Administration, Chung-Ang University, Republic of Korea |
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Abstract: | Prospect theory states that an individual in a loss situation is more likely to make a risky financial decision than when they are in a gain frame. Some researchers observe that Asians tend to have a more positive attitude toward risk in financial decisions than Westerners. The first of two studies tests these two phenomena. The study finds Singaporeans and Chinese to be less risk averse than Dutch and New Zealand people over both a gain and a loss frame when making a personal financial decision. A second study extends this finding to individuals in a business relationship switching suppliers, and finds that when switching is framed as a risky decision the same pattern of behavior occurs. New Zealand and American consumers are more risk averse than those from Japan and Singapore, who are more likely to change suppliers under both a gain and a loss frame. |
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Keywords: | Prospect theory Risky decisions Switching costs Cross-cultural |
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