This presentation is part of: D12-1 (2142) Consumer Economics

Preference for Skew in Lotteries

Luis Santos-Pinto, Ph.D., Economics and Business, University of Lausanne, Ch du Couchant 1, Lausanne, 1007, Switzerland

We use a laboratory experiment to investigate how skew influence choices under uncertainty. Holt and Laury's (2002) procedure is modified in two ways. First, we consider lotteries that have more than two outcomes. Second, we use a graphical display to represent lottery payoffs. We find a statistically and economically significant preference for skew under low and high stakes. We also find a framing effect of the graphical display.