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Stochastic Dominance Under Independent Noise

JOURNAL OF POLITICAL ECONOMY, no. 5.0 (2020): 1877-1900

Cited by: 1|Views14

Abstract

Stochastic dominance is a crucial tool for the analysis of choice under risk. It is typically analyzed as a property of two gambles that are taken in isolation. We study how additional independent sources of risk (e.g., uninsurable labor risk, house price risk) can affect the ordering of gambles. We show that, perhaps surprisingly, backgr...More

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