Cultural Influences on Overreaction

Kok Loang Ooi (), Norazlin Binti Ab Aziz () and Wee Yeap Lau ()
Additional contact information
Kok Loang Ooi: Universiti Malaysia
Norazlin Binti Ab Aziz: Universiti Malaysia
Wee Yeap Lau: Universiti Malaysia

Chapter Chapter 13 in Following the Crowd: Psychological Drivers of Herding and Market Overreaction, 2025, pp 171-188 from Springer

Abstract: Abstract This chapter examines how cultural dimensions, such as collectivism, individualism, and uncertainty avoidance, shape investment decisions and financial behaviour in ways that challenge the assumption of universal market rationality. The discussion analyses how these cultural variables influence investor psychology, risk perception, and strategic choices within both Eastern and Western financial systems. Evidence indicates that variations in cultural values affect levels of risk tolerance, the structure of decision-making processes, and the orientation of regulatory frameworks. Cultural norms embed persistent patterns of market behaviour that differ significantly across regions and contribute to structural inefficiencies and behavioural anomalies. The analysis highlights how cultural influences amplify tendencies toward market overreaction, ultimately affecting volatility and stability in diverse economic environments.

Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-95-0792-4_13

Ordering information: This item can be ordered from
http://www.springer.com/9789819507924

DOI: 10.1007/978-981-95-0792-4_13

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().