Stochastic dominance representation of optimistic belief: Theory and applications

Stochastic dominance representation of optimistic belief: Theory and applications

This note gives a stochastic dominance representation of more optimistic belief in rank dependent expected utility. Applying this observation, we can demonstrate the effect of more optimistic belief on economic decisions and equilibria under risk making comparative static analysis.

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Veröffentlicht in:Economics letters 2008-12, Vol.101 (3), p.275-278
Hauptverfasser: Osaki, Yusuke, Quiggin, John
Format: Artikel
Sprache:eng
Schlagworte:
Comparative statics
Comparative statics Optimistic belief Rank dependent expected utility Stochastic dominance
Optimistic belief
Rank dependent expected utility
Risk
Stochastic dominance
Stochastic processes
Utility theory
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Beschreibung
Zusammenfassung:This note gives a stochastic dominance representation of more optimistic belief in rank dependent expected utility. Applying this observation, we can demonstrate the effect of more optimistic belief on economic decisions and equilibria under risk making comparative static analysis.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2008.09.005