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

Peel, D. and Zhang, J. (2024) On skew preference or non-skew preference of a CPT DM revealed in lottery choices with three payoffs. Economics Letters, 235: 111549. ISSN 0165-1765

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.