Revisiting Independence and Stochastic Dominance for Compound Lotteries

We establish mathematical equivalence between independence of irrelevant alternatives and monotonicity with respect to first order stochastic dominance. This formal equivalence result between the two principles is obtained under two key conditions. Firstly, for all natural numbers m, each principle is defined on the domain of compound lotteries with compoundness level m. Secondly, the standard concept of reduction of compound lotteries applies.

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Year of publication:	2008
Authors:	Zimper, Alexander
Published in:	Topics in Theoretical Economics. - Berkeley Electronic Press. - Vol. 8.2008, 1, p. 1444-1444
Publisher:	Berkeley Electronic Press
Keywords:	normative theory of decision under risk

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Extent:	application/pdf
Type of publication:	Article
Notes:	oai:bepress:bejte-1444
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005579550