Preference for Skew in Lotteries: Evidence from the Laboratory

Thomas Astebro, José Mata and Luis Santos-Pinto ()

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

Abstract: Using a laboratory experiment we investigate how skew inuences choices under risk. We find that subjects make significantly riskier choices when the distribution of payoffs is positively skewed, these choices being driven in part by the shape of the utility function but also by subjective distortion of probabilities. A utility model with probability distortion calibrated on laboratory data is able to explain why most gamblers in public lotteries buy only a small number of tickets.

Keywords: risk; skew; gambling; lab experiment (search for similar items in EconPapers)
JEL-codes: C91 D81 (search for similar items in EconPapers)
Pages: 25 pp. + tables and figures
Date: 2009-06
New Economics Papers: this item is included in nep-cbe and nep-exp
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.hec.unil.ch/deep/textes/09.09.pdf (application/pdf)

Related works:
Working Paper: Preference for Skew in Lotteries: Evidence from the Laboratory (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:09.09

Access Statistics for this paper

More papers in Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie Université de Lausanne, Faculté des HEC, Département d’économie, Internef, CH-1015 Lausanne. Contact information at EDIRC.
Bibliographic data for series maintained by Christina Seld ().