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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