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6.3.4 Ethnicity

Previous studies indicate that the promotion and prevention system are more chronically accessible for those from individualist and collectivist cultures respectively (Lee et al. 2000). Studies also indicate that those from a collectivist background are more risk seeking than those from an individualist background (Hsee and Weber 1999; Weber and Hsee 1998). However, no significant results were obtained with regard to a chi-squared test of association between ethnicity and regulatory focus. It is postulated that this is due to the book being conducted in a cosmopolitan university. In a university with people of diverse backgrounds, par- ticipants would be exposed to modes of thought that are different to their own, and this is proposed to mitigate the effect of one's background predicating their risk preferences and chronic regulatory focus. A cosmopolitan university environment, located in an Asian country, did not give rise to an overwhelming number of prevention participants, although most are from collectivist cultural backgrounds. Instead, there was a roughly even split between chronic promotion and chronic prevention participants.

6.3.5 Theory

The change in risk appetite for financial products, depending on the stimuli pre- sented, is proposed by Zhou and Pham (2004). This book proposes that external stimuli, such as the adverse world financial outlook, can also cause one to select different assets than one normally would.

In the Scholer et al. (2010) study, when a risky option offered the sole possibility of returning to the status quo, after a loss, prevention motivation predicted risk seeking, but no significant results were obtained for the promotion system. Similarly, in this book, those who possessed a prevention focus selected the pre- vention asset on the self-report, even after reporting a positive outlook. For the promotion system, there were no significant results. However, further study is necessary to draw a conclusion with regard to the relative strength of the prevention system over the promotion system.

This book highlights the importance of understanding the motivations that drive financial decision-making. These motivations are purported to explain much of the phenomena that underlie behavioural finance. It is hoped that the extensions to theory proposed by this book, highlight the importance of psychological theory in contemporary financial research. The next section concludes the book and indicates the limitations observed, along with future directions for research.

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