The cushion hypothesis (Weber & Hsee, 1998) states that participants from collectivistic cultures are more likely to take financial risks because they perceive support from the collectivistic nature of their culture and the negative consequences (if any) are mitigated across a number of people and the effects felt by the individual is lessened. Previous studies have shown that the cushion hypothesis exists even among individuals from individualistic societies and appears to stem from the perception of support rather than having actual support (Anant, Spence and Tunney, 2016)1. Interestingly, Chan and Saqib (2015) report that having a large number of online friends (on networking websites like Facebook) results in increased financial risk-taking intentions. This implies that the mere perception of support can affect an individual's decision to take financial risks.
However, to date, studies exploring the cushion hypothesis have only measured financial risk-taking behaviour using self-report measures of behaviour intentions (e.g. likelihood of investing/gambling). No study thus far has studied the cushion hypothesis by measuring actual financial risk-taking behaviour.
We used a novel method of testing the cushion hypothesis by measuring actual financial risk-taking behaviour using virtual currency (in-game gold) in an online massively multiplayer role-playing game: World of Warcraft. By doing so, we are able to test paarticipants' actual behaviour with regard to risk-taking risks with virtual currency and to see if this varies with their perception of social support, contributing to the existing cushion hypothesis literature. Analysis is ongoing but we anticipate that in support of the cushion hypothesis, participants who have more friends and belong to a large group (called a guild) are more likely to take financial risks because they have a larger support network to draw upon if they need to borrow a gold from others for use in the game.
1 Anant, Spence and Tunney (2016). Culture and Risk Taking Behaviour. Presentation at the SRA-Europe Conference 2016, University of Bath.