Multivariate Almost Stochastic Dominance
15 Pages Posted: 5 Jun 2018
Date Written: June 2018
Abstract
Almost stochastic dominance allows small violations of stochastic dominance rules to avoid situations where most decision makers prefer one alternative to another but stochastic dominance cannot rank them. We present the concepts of multivariate almost stochastic dominance and multivariate almost nth‐degree risk and their connections with a preference for combining good with bad. Then, we show how a preference for combining good with bad can be applied to obtain various comparative statics results, and we extend our approach to risk‐prone (convex) stochastic dominance, which relates to the opposite preference, for combining good with good and bad with bad.
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Multivariate Almost Stochastic Dominance
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