The Foreign Language Effect in Risk Decision-Making: A Cross-Country Review of Brazilians and Poles Behavior in a Loss Aversion Experiment

Abstract

In a globalized world, executives and managers face daily the inevitability task of making risky decisions involving different sums of money. In many cases, these decisions arise in a foreign language environment. One main question is to what extent can foreign language change the course of action in decision-making at risk? This study aimed to investigate two effects, the influence of Foreign Language Effect (FLe) in decision-making behavior to analyze Brazilians' and Poles' choices in a loss aversion bet game and to compare the risk acceptance level among groups using English as a foreign language and native languages. Additionally, we compare Brazilians and Poles acceptance level in their mother tongue. Results from 150 people living in Poland and 83 people living in Brazil indicated that both groups are less risk averse in almost all levels of bets, showing that the FLe could reduce, to some extent, the loss aversion on risk aversion bias, and, although native Brazilian participants were more risk averse in both high and low-stakes, it was not possible to verify the relationship between the country of origin and the change in the betting acceptance pattern between these two groups.