Avoiding uncertainty is cultural
The uncertainty avoidance dimension relates to the degree to which individuals of a specific society are comfortable with uncertainty and the unknown. Countries displaying strong uncertainty avoidance index (UAI) believe and behave in a strict manner. Individuals belonging to those countries also avoid unconventional ways of thinking and behaving. Weak UAI societies display more ease in regards to uncertainty.
There are both low and high uncertainty avoidance cultures. The list of cultures which are classified as high uncertainty avoidance cultures include:
While the low uncertainty avoidance cultures include
- United States
People in cultures with high uncertainty avoidance try to minimize the occurrence of unknown and unusual circumstances and to proceed with careful changes step by step by planning and by implementing rules, laws and regulations. In contrast, low uncertainty avoidance cultures accept and feel comfortable in unstructured situations or changeable environments and try to have as few rules as possible. People in these cultures tend to be more pragmatic and more tolerant of change.
In cultures which have a high uncertainty avoidance there is a deliberate and definite avoidance of ambiguity. In contract, cultures such as the United States are filled with ambiguity. In the United States our legal system contains a lot of ambiguity for example and people who attempt to follow the law are always uncertain about the level of risk they are under. In addition, in the United States there is a risk taking culture because risk taking is seen as the only way to get ahead.
There are two categories of imperfectly predictable events between which choices must be made: risky and ambiguous events (also known as Knightian uncertainty). Risky events have a known probability distribution over outcomes while in ambiguous events the probability distribution is not known. The reaction is behavioral and still being formalized. Ambiguity aversion can be used to explain incomplete contracts, volatility in stock markets, and selective abstention in elections (Ghirardato & Marinacci, 2001).
Could uncertainty avoidance also explain the gender gap in the crypto-space?
In the crypto space we notice that it is around 95% male. We have seen this consistently and the question is why? While I have not found a definition answer to that question there is a hypothesis that I do have which states that women culturally have a much higher uncertainty avoidance. This would translate into risk taking behavior and it seems that in most cultures the men are conditioned to be the risk takers.
Cultures showing high uncertainty avoidance have a low tolerance for ambiguity and vagueness in most day-to-day situations. In other words, they tend to be risk-averse and favour rules and a well-structured environment over unknown or unstructured situations. People in cultures with a low tolerance to uncertainty will also tend to establish laws, rules, regulations and control mechanisms to prevent any ambiguity or risk. In a business context, this means that in cultures that have a low tolerance to uncertainty you may find:
Could this tolerance for uncertainty in men merely be because men are more used to dealing with this level of uncertainty? This uncertainty avoidance hypothesis could also be used to explain why some countries adopt harsh regulations in fear of crypto while other cultures are more quick to embrace it. This isn't exactly correlated tightly though because we can look at both Japan and Singapore, neither of which seem to have harsh regulations. At the same time the United States is the land of guns and weapons, and the idea that people have a right to arms is quite unique to American culture. This shows that at least with regard to American culture, there is a deep acceptance of uncertainty, of risk.
Getting involved in the crypto space is perceived as very risky. It is very unorthodox, and there is a lot of fear surrounding these activities. Some of us see this as a once in a lifetime opportunity while others see it as too risky, or dangerous for society. The question which this blog tried to answer is whether or not cultural differences play a role. If it is cultural difference then societal conditioning may be a prime factor to explain why some are more willing to take risks of this sort than others.
What exactly is it about being American and male that would make someone become attracted to cryptocurrency? Is it distrust? Is it the need to feel independent? Is it the willingness to take big risks? What is it?