BEER Lab Meeting - Irene Comeig

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.