Upside versus downside risk: Gender, stakes, and skewness

Irene Comeig, Charles Holt and Ainhoa Jaramillo-Gutiérrez

Journal of Economic Behavior & Organization, 2022, vol. 200, issue C, 21-30

Abstract: Risky choices often involve a tradeoff between expected payoff and payoff variability. Subjects in a simple experiment, however, exhibit more aversion to “downside risk” (with a small probability of a low payoff) and more attraction to “upside risk” (with a small probability of a high payoff). Women tend to be more averse than men for downside risk, but not for upside risk. These patterns are evaluated in terms of the utility curvature and probability weighting components of risk preferences. Gender differences in downside risk are relevant for the design of appropriately gender-tailored policies and algorithms for saving, financing, and entrepreneurship.

Keywords: Risk aversion; Skewness; Payoff scale; Probability weighting; Rank-dependent utility; Gender differences; Experiments (search for similar items in EconPapers)
JEL-codes: C92 G20 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:200:y:2022:i:c:p:21-30

DOI: 10.1016/j.jebo.2022.04.017

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