Risk Preferences in China — Results from Experimental Economics

Abstract

The propensity to take risks is a fundamental trait that determines the nature of decision making. For example, risk taking is regarded as an important driver of entrepreneurial and innovative behavior in an economy. In this paper, we survey the empirical evidence on individual risk-taking behavior in China. We focus on those studies that elicit preferences for risk taking involving real monetary stakes under controlled conditions, using the methods of Experimental Economics. The studies that we summarize compare Chinese subjects to those in other countries. While non-incentivized surveys find that Chinese subjects are more willing to take risks than Germans and Americans are, the existing experimental studies suggest that this relationship is less clear cut.