We provide laboratory evidence that people neglect skewness resulting from compound shocks.

We provide laboratory evidence that people neglect skewness resulting from compound shocks.

Multiplicative growth processes that are subject to random shocks often have a skewed distribution of outcomes. A simple laboratory experiment shows that participants either strongly underestimate skewness or ignore it completely. The participants' choices reveal bounds on their subjective...

We provide laboratory evidence that people neglect skewness resulting from compound shocks.

We provide laboratory evidence that people neglect skewness resulting from compound shocks.

Multiplicative growth processes that are subject to random shocks often have a skewed distribution of outcomes. A simple laboratory experiment shows that participants either strongly underestimate skewness or ignore it completely. The participants' choices reveal bounds on their subjective...