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A Note on Skewness Seeking: An Experimental Analysis

  • Tobias Broenner

    (Institut zur Erforschung der wirtschaftlichen Entwicklung, Albert-Ludwigs-Universitaet Freiburg)

  • Rene Levinsky

    ()

    (Max Planck Institute of Economics, Jena)

  • Jianying Qiu

    (Max Planck Institute of Economics, Jena)

In this paper we experimentally test skewness seeking at the individual level. Several prospects that can be ordered with respect to the third-degree stochastic dominance (3SD) criterion are ranked by the participants of the experiment. We ï¬nd that the skewness of a distribution has a signiï¬cant impact on the decisions. Yet, while skewness has an impact, its direction differs substantially across subjects: 39% of our subjects act in accordance with skewness seeking and 10% seem to avoid skewness. On the level of individual decisions we ï¬nd that the variance of the prospects and subjects’ experience increase the probability of their choosing the lottery with greater skewness.

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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2007-079.

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Date of creation: 01 Nov 2007
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Handle: RePEc:jrp:jrpwrp:2007-079
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