Stochastic Dominance Analysis without the Independence Axiom
Vioglio characterizes the consistency of a large class of nonexpected utility preferences
(for example, mean-variance preferences or prospect theory preferences) with integral
stochastic orders (for example, the various versions of stochastic dominance).
The characterization rests on a novel decision theoretic result that provides a behavioral
interpretation of the set of all derivatives of the functional representing the decision
maker preferences. As an illustration, Vioglio studies in some detail the differential
properties of prospect theory.
*Joint work with F. Maccheroni and M. Marinacci
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