"Cross-Cultural Variations in Adaptation to Gains and Losses"
Brickman et al. (1978, JPSP) were among the first to suggest a "hedonic treadmill:" following a gain, people seem to adapt so quickly and completely that soon it no longer seems like much of a gain. That's why people want still more gains. On the other hand, the sunk cost effect is predicated on the fact that people do not adapt to their losses, but instead continue to "throw good money after bad" in a futile effort to eradicate those losses. Using both questionnaires and real money studies, my colleagues in the Department of Finance and I use prospect theory to explain both phenomena. We also find unanticipated differences among American, Chinese, and Korean subjects in this research. I will ask you folks to help me explain these cross-cultural differences. My colleagues--American, Chinese, and Korean--can use all of the astute hypotheses we can get.
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