Upside Versus Downside Risk: Gender, Stakes, and Skewness: Single Decision Data

Upside Versus Downside Risk: Gender, Stakes, and Skewness *
Irene Comeig, Charles Holt, and Ainhoa Jaramillo-Gutiérrez

The simplest perspective on risky choice is in terms of a tradeoff between higher expected payoff and higher payoff variability. Subjects in a simple experiment, however, exhibit more aversion to “downside risk” (with a small probability of a relatively low payoff) and more attraction to an equivalent “upside risk” (with a small probability of a high payoff). Females tend to be more averse than males to downside risk, but there is no gender difference for upside risk. These patterns are evaluated by deconstructing gender differences and similarities in the utility curvature and probability weighting components of risk preferences.