Salience and Skewness Preferences

Dertwinkel-Kalt, Markus; Köster, Mats

Salience and Skewness Preferences

Dateien

Dertwinkel-Kalt_2-6nsnkc41y60k4.pdfGröße: 568.7 KBDownloads: 305

Datum

2020

Autor:innen

Dertwinkel-Kalt, Markus

Köster, Mats

Open Access-Veröffentlichung

Open Access Hybrid

Sammlungen

Wirtschaftswissenschaften

Publikationstyp

Zeitschriftenartikel

Publikationsstatus

Published

Erschienen in

Journal of the European Economic Association. Oxford University Press. 2020, 18(5), pp. 2057-2107. ISSN 1542-4766. eISSN 1542-4774. Available under: doi: 10.1093/jeea/jvz035

Zusammenfassung

Whether people seek or avoid risks on gambling, insurance, asset, or labor markets crucially depends on the skewness of the underlying probability distribution. In fact, people typically seek positively skewed risks and avoid negatively skewed risks. We show that salience theory of choice under risk can explain this preference for positive skewness, because unlikely, but outstanding payoffs attract attention. In contrast to alternative models, however, salience theory predicts that choices under risk not only depend on the absolute skewness of the available options, but also on how skewed these options appear to be relative to each other. We exploit this fact to derive novel, experimentally testable predictions that are unique to the salience model and that we find support for in two laboratory experiments. We thereby argue that skewness preferences—typically attributed to cumulative prospect theory—are more naturally accommodated by salience theory.

Fachgebiet (DDC)

330 Wirtschaft

Zitieren

ISO 690

DERTWINKEL-KALT, Markus, Mats KÖSTER, 2020. Salience and Skewness Preferences. In: Journal of the European Economic Association. Oxford University Press. 2020, 18(5), pp. 2057-2107. ISSN 1542-4766. eISSN 1542-4774. Available under: doi: 10.1093/jeea/jvz035

BibTex

@article{DertwinkelKalt2020-10-01Salie-53788,
  year={2020},
  doi={10.1093/jeea/jvz035},
  title={Salience and Skewness Preferences},
  number={5},
  volume={18},
  issn={1542-4766},
  journal={Journal of the European Economic Association},
  pages={2057--2107},
  author={Dertwinkel-Kalt, Markus and Köster, Mats}
}

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