Title: Skewness seeking: Risk loving, optimism or overweighting of small probabilities?
Authors: Astebro, Thomas ×
Mata, José
Santos-Pinto, Luis #
Issue Date: Feb-2015
Publisher: Springer New York LLC
Series Title: Theory and Decision vol:78 issue:2 pages:189-208
Article number: 29 jan 2014
Abstract: In a controlled laboratory experiment we use one sample of college students and one of mature executives to investigate howpositive skewinfluences risky choices.
In reduced-form regressions we find that both students and executives make riskier choices when lotteries display positive skew. We estimate decision models to explore
three explanations for skew seeking choices: risk-loving (convex utility), optimism (concave probability weighting) and likelihood insensitivity (inverse s-shape probability
weighting). We find no role for love for risk as neither students nor executives have convex utility. Both optimism and likelihood insensitivity play a part in skew
seeking choices. Likelihood insensitivity is larger for students than for executives.
Executives have more concave utility and are more optimistic than students, but this is found to be largely due to them being older.
ISSN: 0040-5833
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Non-KU Leuven Association publications
× corresponding author
# (joint) last author

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