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Salience and Relative Skewness

Last registered on November 13, 2018
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Pre-Trial

Trial Information

General Information

Title
Salience and Relative Skewness
RCT ID
AEARCTR-0003545
Initial registration date
November 10, 2018

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
November 13, 2018, 1:08 AM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Germany
Region

Primary Investigator

Name
Markus Dertwinkel-Kalt
Affiliation
University of Cologne
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Other Primary Investigator(s)

PI Name
Mats Köster
PI Affiliation
DICE
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Additional Trial Information

Status
In development
Start date
2018-11-13
End date
2018-12-31
Keywords
Finance & Microfinance
Additional Keywords
JEL code(s)
D81
Secondary IDs
Abstract
It is a robust finding in the literature on choice under risk that people like right-skewed, but avoid left-skewed risks (e.g., Golec and Tamarkin,1998, Sydnor, 2010, or Ebert, 2015). We conduct a laboratory experiment in order to test whether, beside this preference for absolute skewness, there is also a preference for relative skewness. By changing the correlation structure of lotteries we can manipulate how skewed these lotteries are relative to each other without affecting their absolute skewness. We thereby test for key predictions of salience theory of choice under risk (Bordalo et al., 2012) that allow us to distinguish it from cumulative prospect theory (Tversky and Kahneman, 1992).
External Link(s)

Registration Citation

Citation
Dertwinkel-Kalt, Markus and Mats Köster. 2018. "Salience and Relative Skewness." AEA RCT Registry. November 13. https://doi.org/10.1257/rct.3545-1.0
Former Citation
Dertwinkel-Kalt, Markus and Mats Köster. 2018. "Salience and Relative Skewness." AEA RCT Registry. November 13. https://www.socialscienceregistry.org/trials/3545/history/37113
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
In a within-subjects design, we study in how far the choice between a right-skewed and a left-skewed lottery (with the same expected value and the same variance) depends on the correlation of these lotteries and how the correlation interacts with the level of absolute skewness.
Intervention Start Date
2018-11-13
Intervention End Date
2018-12-13

Primary Outcomes

Primary Outcomes (end points)
Proportion of preference reversals from the right-skewed lottery under negative correlation to the left-skewed lottery under positive correlation.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Each individual makes twelve binary decisions in random order. In each decision the subject chooses between two lotteries that form a Mao pair. A Mao pair is uniquely defined by its expected value (E), its variance (V), its absolute skewness (S), and its correlation structure. One of the lotteries is right-skewed and the other one is left-skewed. We use six different Mao pairs, three of which are rather skewed (i.e., S = 2.7) with E=36 and V=144, with E=72 and V=576, and with E=108 and V=1296, while the remaining three are rather symmetric (i.e, S = 0.6) again with E=36 and V=144, with E=72 and V=576, and with E=108 and V=1296. For each Mao pair subjects choose between the right-skewed and the left-skewed lottery both under perfectly negative correlation and under maximal positive correlation.
Experimental Design Details
Randomization Method
Randomization is done by the computer.
Randomization Unit
Individual
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
110 individuals
Sample size: planned number of observations
660 paired choices
Sample size (or number of clusters) by treatment arms
330 paired choices for symmetric Mao pairs, 330 paired choices for skewed Mao pairs
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials