Stocks as Lotteries? An Experimental Test of Expected Utility versus Behavioral Models

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ID: 322966
2026
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Abstract
Abstract Our study provides the first causal test of classical and behavioral asset pricing models that incorporate skewness pricing. In line with these models, our experimental markets show that skewness is systematically priced. Our findings also reveal that positively skewed assets available in small supply exhibit negative expected returns, which is consistent with prospect theory, but not with expected utility models. Furthermore, in line with the mechanism underlying prospect theory, we show that the negative returns of the positively skewed asset are most pronounced during market sessions where traders overweight the low probability of receiving a large payoff. (JEL C92, G10, G40)
Reference Key
openalex_W7171769769 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Brice Corgnet, Yao Thibaut Kpegli, Jacopo Magnani
Journal review of financial studies
Year 2026
DOI
10.1093/rfs/hhag070
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