Skewness Preferences: Evidence from Online Poker
52 Pages Posted: 22 Jun 2022 Last revised: 29 Feb 2024
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Skewness Preferences: Evidence from Online Poker
Skewness Preferences: Evidence from Online Poker
Date Written: February 26, 2024
Abstract
We test for skewness preferences in a large set of observational panel data on online poker games (n=4,450,585). Each observation refers to a choice between a safe option and a binary risk of winning or losing the game. Our setting offers a real-world choice situation with substantial incentives where probability distributions are simple, transparent, and known to the decision-makers. Individuals reveal a strong and robust preference for skewness, which is inconsistent with expected utility theory. The effect of skewness is most pronounced among experienced and unsuccessful players but remains significant in all subsamples that we investigate, in contrast to the effect of variance.
Keywords: Risk Attitudes,Choice under Risk, Skewness, Gambling
JEL Classification: D01, D81, G40
Suggested Citation: Suggested Citation