Evaluating lotteries, risks, and risk-mitigation programs

Two experiments were designed to explore the existence of systematic differences in risk perceptions and risk attitudes between Chinese and US participants. The first experiment involved ranking monetary lotteries using measures of perceived riskiness and willingness to pay (WTP). Several simple heuristics were evaluated to predict perceived riskiness and WTP. Using WTP responses, Cumulative Prospect Theory functions were determined for participants from both countries. The second experiment involved ranking multi-attribute real-world risks and associated risk-mitigation programs using measures of concern and preference, respectively. Compared to their US counterparts, Chinese participants are found to be less risk averse, more concerned about risks with higher catastrophic potential, and more in favor of risk-mitigation programs with greater scope of benefit. The results also reveal higher within-group agreement by Chinese participants for all tasks. For both national groups, the within-group agreement was highest when ranking risk-mitigation programs, but lowest when ranking lotteries with negative expected value. The implications of cross-cultural versus cross-task variation are discussed.