 The impacts of superstition on risk preferences and beliefs: Evidence from the Chinese zodiac yearNan Wu, Xiaomeng Zhang and Wenyu Zhou China Economic Review, 2023, vol. 81, issue C Abstract: Previous studies have extensively confirmed that superstition profoundly influences a wide range of economically consequential decisions. However, the underlying mechanisms largely remain unexplored. Specifically, superstitions can affect either people's endogenous risk preferences or their subjective beliefs about uncertain events. Clarifying which of these two mechanisms is at work holds both policy and practical relevance. Notably, a change in risk preferences does not deviate from the conventional utility maximization framework, while a distortion in beliefs may lead to a welfare loss in decision-making. In this paper, we distinguish these two mechanisms using novel experimental methods, taking the Chinese zodiac year as an example. We find that the zodiac year correlates with both an increase in risk aversion and excessive pessimism in decision-making. Furthermore, we illustrate the potential impacts of zodiac year superstition on real-world businesses through two case studies. Keywords: Zodiac year; Superstition; Risk preference; Pessimism; Experiment; Stock investment; Insurance purchase (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:81:y:2023:i:c:s1043951x23001281 DOI: 10.1016/j.chieco.2023.102043 Access Statistics for this article China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu More articles in China Economic Review from Elsevier |
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