Decision Making in Individualistic and Collectivistic Cultures

How do cultural values influence individuals' decision making? One would expect answers to this question either from cognitive psychology or from cross-cultural psychology. Cognitive theories on decision making, however, rarely consider the factor of culture, and research in cross-cultural psychology deals only to a small extent with decision making. Therefore the study of culture and decision making is a relatively new and unexplored field. In this paper normative and descriptive approaches to decision making are discussed and three crosscultural studies on decision making in individualistic and collectivist cultures using different methodologies are described. The results are integrated into a model that can be helpful to derive specific hypotheses for further studies in this field. Creative Commons License This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License. This article is available in Online Readings in Psychology and Culture: http://scholarworks.gvsu. edu/orpc/vol4/iss1/3 Decision Making According to Normative Models and Descriptive Models Decision making is the selection between several options. We make many decisions a day (e.g., when we go to the grocery store and choose a bottle of milk, when we select a TV channel, when we decide what to prepare and eat for breakfast, whether we buy a new DVD-player or save the money for our next holiday trip). Most of our decisions might occur unconsciously, but often we have to consciously decide among several options. Imagine a student, called John, who finishes high school. John has to decide whether to study psychology, accounting or art. In Figure 1, psychology is choice 1, accounting is choice 2 and art is choice 3. Which subject will the student choose? Figure 1: Abstract schema of a simple decision task. Using normative models of decision making, we try to explain which is the best choice from among several choices. In effort to explain the decision making process, von Neumann and Morgenstern (1944) utilized a normative model that they called the expected utility model. According to this model, John will make the decision that maximizes an expected utility. The expected utility of an alternative is the sum of the product of its probabilities of success and its utilities as demonstrated in the following formula: Expected utility = (probability of a given outcome) x (utility of the outcome) 3 Guess: Decision Making in Individualistic and Collectivistic Cultures Produced by The Berkeley Electronic Press, 2011 Although this formula may look difficult, it is easy to understand with a concrete, simplified example. According to the formula, the student evaluates each option: psychology, accounting, and art. John estimates the probability of success in each subject. Perhaps John thinks that the success rate is highest in art (art .80, psychology .70, and accounting .50). Then the personal value of success (i.e., the utility) will be evaluated. Let's assume John's favorite subject is psychology, followed by art and then accounting (psychology 20, art 15, and accounting 10). Finally, John would choose the alternative with the highest expected utility, in our case psychology (psychology 14, accounting 5, and art 12). Does John really make a decision following the rational of expected utility theory? First of all, the decision problem is more complex. As Figure 2 shows, the number of courses is not limited to two or three, but a lot more (e.g., languages, law, medicine, education, computer science, business administration, communication). First, decision making involves not only the choice of one alternative, but is related to the generation of possibly relevant alternatives. Figure 2: Abstract schema of a complex life decision problem. 4 Online Readings in Psychology and Culture, Unit 4, Subunit 1, Chapter 3 http://scholarworks.gvsu. edu/orpc/vol4/iss1/3 Second, what is the success criterion? Is the success criterion only to get a good degree? Isn't the reputation of the university also important? Is a bad degree from Harvard better than a good degree from a not so known university? Another success criterion might be the chance to get a well-paid job after finishing college. Third, how does John assign numeric values to the probabilities and utilities of each alternative? Why does the utility of psychology get a value of 20 and not of 17 or 23? If psychology would get the value 17 then the expected utility would be . 70 * 17 = 11.9. Then art would have the higher expected utility with 12 and would be the best choice. It does not seem easy to assign a specific value for each probability and utility. The artificiality of such reasoning is clear in the example described above. Real-life is more complex since it is never possible to evaluate every option much less to evaluate it exhaustively. Furthermore, possible short-term and long-term consequences are hard to predict, making it difficult to assign such numeric values. Fourth in real life, choices with the highest expected value often are not taken. Other aspects might lead John to choose a specific course: "Are my friends also studying the same course? What does my best friend suggest? I know one teacher who is great, so I will study what he teaches. " A fifth criticism of normative models is that they explain which of several given alternatives is the best choice, but they do not deal with the process of decision. Descriptive theories of decision making deal with this topic and describe the process of decision making. John would probably not sit down and say: "Now I will choose what I want to study. " He might think about this problem for several months, searching for information that might be helpful for the decision (e.g., talking with people). Thus, many descriptive decision making models (see Lipshitz, 1993) describe the decision-making process not as a single act but as a process that is embedded in other cognitive processes. John first has to recognize that choosing a subject is a problem. If he does not worry about it, then he will not deal with this problem. If John views the selection of a subject as a problem, he will think about possible effects such as "If I study art, I might have fun, but it will be difficult for me to earn money and I do not want always to worry about my finances. " Suppose that John already thought about his goals -earning money and having fun. He prioritized the goals and mentioned that earning money is more important to him. John might ask his parents and friends about their experiences at college and at work to get a broader view and a better understanding of the problem. Step-by-step he will develop a mental model of possible courses, advantages, disadvantages, consequences, etc. With this knowledge, he will develop some plans about what to study. He will evaluate the different alternatives, compare them with each other, reject bad alternatives, and finally make a decision about what to study -probably even up to the day he has to register for his first class. After some weeks John hopefully thinks: "Yes, that is the right choice! " All these steps of decision making are summarized in the following list: 1. Recognize that a decision problem exists 2. Investigate the causes and possible effects of the problem 3. Define and prioritize goals 5 Guess: Decision Making in Individualistic and Collectivistic Cultures Produced by The Berkeley Electronic Press, 2011 4. Gather relevant and necessary information 5. Evaluate and organize the information into a mental model 6. Plan alternative solutions 7. Anticipate consequences of possible decisions 8. Select a reference alternative (preliminary choice) as an anchor to compare the other alternatives with 9. Select and reject bad alternatives 10. Select the best solution and make a decision 11. Inform others of decision and rationale 12. Evaluate outcome Culture: Individualism-Collectivism and Power-Distance Imagine that John lives in the United States, Roberto lives in Venezuela, Frida in Germany and Sheena in India. Imagine all are about the age of 16 or 17 and all have a financial background in which they can afford college. All have to decide what course to take. Do you think that their decision making will be similar or do you think it will be different because of their cultural background? The cultural background of John, Roberto, Frida and Sheena is different in many ways: their plans for their future; their experiences; their values; their family size; the role and influence of mother, father, siblings and friends on their decision etc.; Culture is a very heterogeneous term and a generally accepted definition does not exist. Depending on the specific area of interest of the researcher he or she focuses on a specific aspect of culture. In this paper, the focus will lie on value orientations in different cultures and their relation to decision making. When you hear the word value you might think of the example: "Do not kill! Or: Make a lot of money! " A value can be either terminal (Rokeach, 1973), saying what we have to do. In this case it is similar to a goal: "Do not kill! " A value can be also instrumental telling how we should do something, for example: "Think a lot before you make a decision! Or: Talk to others before you decide! " In cross-cultural psychology, the most popular and widely analyzed dimension of cultural values is individualism and collectivism (e.g., Hofstede, 2000; Kim, Triandis, Kagitcibasi, Choi, & Yoon, 1994). Individualistic cultures are defined by detachment from relationships and community. The individual views himself or herself as relatively independent from others. In contrast, collectivist cultures stress the importance of relationships, roles and status within the social system. Individualism-collectivism is a very broad dimension used to differentiate cultures. In recent years, different aspects of individualism and collectivism have been treated more specific