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On skew preference or non-skew preference of a CPT DM revealed in lottery choices with three payoffs

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  • Peel, David
  • Zhang, Jie

Abstract

In this letter we illustrate that the representative Cumulative Prospect Decision Maker when choosing between lotteries with three payoffs that exhibit the same probabilities of payoffs and expected return and variance can exhibit either skew preference or non-skew preference and consequently explain the conflicting experimental result reported in the literature.

Suggested Citation

  • Peel, David & Zhang, Jie, 2024. "On skew preference or non-skew preference of a CPT DM revealed in lottery choices with three payoffs," Economics Letters, Elsevier, vol. 235(C).
    • Handle: RePEc:eee:ecolet:v:235:y:2024:i:c:s0165176524000338
    DOI: 10.1016/j.econlet.2024.111549
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    More about this item

    Keywords

    Cumulative prospect theory; Skewness; Kurtosis; Lotteries;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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