To buy or to sell: cultural differences in stock market decisions based on price trends
Version of Record online: 1 FEB 2008
Copyright © 2008 John Wiley & Sons, Ltd.
Journal of Behavioral Decision Making
Volume 21, Issue 4, pages 399–413, October 2008
How to Cite
Ji, L.-J., Zhang, Z. and Guo, T. (2008), To buy or to sell: cultural differences in stock market decisions based on price trends. J. Behav. Decis. Making, 21: 399–413. doi: 10.1002/bdm.595
- Issue online: 26 SEP 2008
- Version of Record online: 1 FEB 2008
- stock prices;
- lay theories of change
Four studies compared the stock market decisions of Canadians and Chinese. In two studies using simple stock market trends, compared with Chinese, Canadians were more willing to sell and less willing to buy falling stock. But when the stock price was rising, the opposite occurred: Canadians were more willing to buy and less willing to sell. A third study showed that for complex stock price trends, Canadians were strongly influenced by the most recent price trends: they tended to predict that recent trends would continue and made selling decisions without considering the rest of the trend patterns; whereas the Chinese made reversal predictions for the dominant trends and made decisions that took both recent and early trends into consideration. Study 4 replicated the finding with experienced individual investors. These findings are consistent with the previous literature on different lay theories of change held by Chinese and North Americans. Copyright © 2008 John Wiley & Sons, Ltd.