A Behavioral Characterization of the Likelihood Ratio Order

11 Pages Posted: 19 Feb 2020 Last revised: 26 Jun 2020

See all articles by Maximilian Mihm

Maximilian Mihm

New York University (NYU) - Abu Dhabi

Lucas Siga

New York University (NYU) - Abu Dhabi

Date Written: June 26, 2020

Abstract

It is well-known that stochastic dominance is equivalent to a unanimity property for monotone expected utilities. For lotteries over a finite set of prizes, we establish an analogous relationship between likelihood-ratio dominance and monotone betweenness preferences, which are an important generalization of expected utility.

Keywords: betweenness preferences, expected utility, likelihood-ratio dominance, stochastic dominance

JEL Classification: D80, D81

Suggested Citation

Mihm, Maximilian and Siga, Lucas, A Behavioral Characterization of the Likelihood Ratio Order (June 26, 2020). Available at SSRN: https://ssrn.com/abstract=3524753 or http://dx.doi.org/10.2139/ssrn.3524753

Maximilian Mihm (Contact Author)

New York University (NYU) - Abu Dhabi ( email )

Abu Dhabi
United Arab Emirates

Lucas Siga

New York University (NYU) - Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates

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