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 , each principle is defined on the domain of compound lotteries with compoundness level . Secondly, the standard concept of reduction of compound lotteries applies.

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Year of publication:	2008
Authors:	Zimper, Alexander
Institutions:	Economic Research Southern Africa (ERSA)

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Extent:	application/pdf
Series:	Working Papers.
Type of publication:	Book / Working Paper
Notes:	Number 97
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008563322