Abstract
I modify the skewed lottery task introduced by Grossman and Eckel (Journal of Risk and Uncertainty, 51(3), 2015) to eliminate the effects of loss aversion as a potentially confounding explanation for the strong preference for skewed lotteries and increase in risk taking that they observe when skew increases. I also test for framing effects by reversing the order of the task. Like previous studies, a majority of subjects prefer skewed lotteries relative to those with no skew, but this preference is dampened when loss aversion is eliminated as a confound and the order of the task is reverse. More importantly, introducing skew is unlikely to cause an increase in risk taking in this task.
| Original language | English |
|---|---|
| Pages (from-to) | 245-261 |
| Number of pages | 17 |
| Journal | Journal of Risk and Uncertainty |
| Volume | 61 |
| Issue number | 3 |
| DOIs | |
| State | Published - Dec 2020 |
Funding
This research is partially funded by a University of Montana Small Grant. I am especially grateful for helpful comments and suggestions from Doug Dalenberg. I also thank Lynzee Lee, Mason Gedlaman, and Aaron Nicholson for assistance with the administration of the experiment. All errors are my own.
Keywords
- Framing effects
- Order effect
- Position effect
- Risk aversion
- Skewness