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Upside versus downside risk: Gender, stakes, and skewness

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  • Comeig, Irene
  • Holt, Charles
  • Jaramillo-Gutiérrez, Ainhoa

Abstract

Risky choices often involve a tradeoff between expected payoff and payoff variability. Subjects in a simple experiment, however, exhibit more aversion to “downside risk” (with a small probability of a low payoff) and more attraction to “upside risk” (with a small probability of a high payoff). Women tend to be more averse than men for downside risk, but not for upside risk. These patterns are evaluated in terms of the utility curvature and probability weighting components of risk preferences. Gender differences in downside risk are relevant for the design of appropriately gender-tailored policies and algorithms for saving, financing, and entrepreneurship.

Suggested Citation

  • Comeig, Irene & Holt, Charles & Jaramillo-Gutiérrez, Ainhoa, 2022. "Upside versus downside risk: Gender, stakes, and skewness," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 21-30.
    • Handle: RePEc:eee:jeborg:v:200:y:2022:i:c:p:21-30
    DOI: 10.1016/j.jebo.2022.04.017
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    Cited by:

    1. Lambrecht, Marco & Oechssler, Joerg, 2023. "Do women shy away from risky skill games?," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 241-250.
    2. Goel, Rajeev K. & Nelson, Michael A., 2023. "Women’s political empowerment: Influence of women in legislative versus executive branches in the fight against corruption," Journal of Policy Modeling, Elsevier, vol. 45(1), pages 139-159.

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    More about this item

    Keywords

    Risk aversion; Skewness; Payoff scale; Probability weighting; Rank-dependent utility; Gender differences; Experiments;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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