Evidence for multiple strategies in choice under risk

This paper describes an experimental study that yields evidence for the coexistence of two decision strategies of choice under risk. Under the first strategy, choices are made based on aspiration levels – a heuristic that simplifies risky decisions. Under the second strategy, which can be used when aspiration levels are not determinative, choices are made based on preferences for positive skewness. Our model fitting confirms the efficacy of a two-pronged approach that can marshal either strategy depending on specific features of the risky prospects under consideration.