Valuing Cultural Differences and Prospect Theory

In this paper, we aim to investigate cultural differences in economic decision making. Instead of rational utility maximizing b behavior, we adopt the Prospect theory, which assumes asymmetric between losing and gaining. We conducted a survey among 146 students from the Middle East Technical University, Turkey. We compared our results from Turkish despondence with a study of Chinese and Americans by Levington and Peng (2007). We found strong evidence of cultural differences in valuation of assets. We tested (1) Framing Effect (2) Morality Effect and (3) Group Bias. We found that value judgments of Turkish participants are very different from the Chinese and the Americans. The Turkish people had difficulties in estimating real values in inflationary environment. This indicates how people can loss in touch with the real values in inflationary environment. The framing effect among Turkish people is also contrary to results for Americans and Chinese. We found that Turkish people value what they find more than what they loss. This is a cultural trade of Turkish people that they highly value future, which can be influenced, contrary to the pass. Hence, Turks do not moan for the past .The loss aversion of Chinese do not apply to the Turkish participants. The loss aversion applies to Turkish people, similar to the Chinese with respect to the lost object belonging to the original owner rather than the finder. Hence, the framing effects have influences on the American and the Chinese, as well as the Turkish participants, but in different ways