Risk Preferences and Field Behavior: The Relevance of Higher-Order Risk Preferences
That is the title of a recent paper by Schneider and Sutter (2026). While many people are familiar with the concept of risk aversion, the dispersion of outcomes (i.e., risk) is not the only thing that matters. The skewness of distribution (prudence) and risk in the tails of the distribution (temperance) matters. For instance, prudent…