This paper develops new financial theory to link the third order stochastic dominance for risk-averse and risk-seeking investors and provide illustration of application in risk management. We present some interesting new properties of third order stochastic dominance (TSD) for risk-averse and...

Investor behavior towards risk lies at the heart of economic decision making in general and modern investment theory and practice in particular. This paper uses both the mean-variance (MV) criterion and stochastic dominance (SD) procedures to analyze the preferences for four of the most widely...