Intuition in Investment Decision-Making Across Cultures

Haili Wu

Journal of Behavioral Finance, 2022, vol. 23, issue 1, 106-122

Abstract: Interest in the phenomenon of intuition in the fields of business and management has grown rapidly in recent years. However, whilst this subject has seen significant theoretical advances, empirical work in this area has tended to lag behind. Even fewer studies have examined intuition from a cultural and cross-cultural perspective. I studied the phenomenon of intuitive decision-making in the asset management sector through the use of in-depth semi-structured interviews (N = 42) and self-reported cognitive tests (N = 30) on a population of 72 experienced professional fund managers from both China and the West. The present research found that Chinese and Western fund managers were not significantly different in their preference for an intuitive cognitive thinking style. However, Chinese fund managers were more likely than Western fund managers to use intuition in their investment decision-making. It is thus concluded that the use of intuition is different from intuitive predisposition. In other words, individuals may have a dominant or preferred cognitive thinking style, whereas their decision-making behavior is influenced by the demands of the situation or task. Based on these findings, I update the typology of intuitive and contextual "signalling”, created by [Hensman, A., and E. Sadler-Smith. 2011. “Intuitive Decision Making in Banking and Finance.” European Management Journal 29 (1):51–66]. The updated typology provides a basis for practical recommendations and offers potential directions for future inquiries into this vital aspect of investment cognition and decision-making behavior.

Date: 2022
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DOI: 10.1080/15427560.2020.1848839

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