Boundary Conditions for the Positive Skew Bias

Abstract

Gambles that involve a large but unlikely gain coupled with a small but likely loss – like purchasing a lottery ticket or insurance – are positively-skewed. Positively-skewed gambles are preferred by people. Here we attempt to better understand when people are more drawn towards positively-skewed outcomes. For instance, animal research suggests that there may be a greater preference for more strongly-skewed options. Here we explore if this trend extends to humans. In two online studies (Study 1: n = 209; Study 2: n = 210), healthy participants between the ages of 22 and 85 made choices between a positively-skewed gamble and either a certain outcome (Study 1) or a symmetric gamble (Study 2). After making their choices, participants were queried about their decision-making strategy, affective status, cognitive abilities, and real-world financial decision making. Logistic regression analyses revealed that people were more likely to accept moderately- and strongly-skewed gambles over equivalent certain outcomes (Study1), but they less likely to accept moderately- and strongly-skewed gambles over equivalent symmetric gambles (Study 2). Exploratory analyses revealed that participants who were more likely to accept skewed gambles endorsed an affective strategy (Study 1) and reported experiencing higher arousal (Study 2). Participants in both studies with stronger cognitive abilities were less likely to accept skewed gambles. Collectively, these results suggest greater preference for more strongly positively-skewed gambles is (1) limited to potential gains and (2) more common when choosing between a skewed option and a certain outcome.