Article

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

The Kellstadt Graduate School of Business, DePaul University, IL, United States
Organizational Behavior and Human Decision Processes (Impact Factor: 3.13). 07/2010; 112(2):99-111. DOI: 10.1016/j.obhdp.2010.02.002
Source: RePEc

ABSTRACT 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.

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    • "From this follows our conclusion that all nations do not place the same degree of emphasis on voice, an observation that is generally consistent with other work (e.g., Brockner et al., 2001; Li & Cropanzano, 2009). Further attesting to the validity of our present findings is recent research on reference points across nations (e.g., Arkes et al., 2010). However, little evidence supported our prediction that preferred voice minimums would be lower (higher) for participants from higher (lower) power distance countries. "
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    • "Nevertheless, it is important to remark that perfect weighted average processes represent a simplification of the reality. An interesting (and empirically validated) refinement postulates that people tend to adapt their reference quite fastly to unexpected improvements of their economic conditions, while the adaptation to losses requires more time and can even result in an incomplete process (see Strahilevitz and Loewenstein, 1998; Diener et al., 2006; Arkes et al., 2008, 2010; Lyubomirsky, 2011). "
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