Weighted Almost Stochastic Dominance: Revealing the Preferences of Most Decision Makers in the St. Petersburg Paradox
Chin Hon Tan ()
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Chin Hon Tan: Department of Industrial and Systems Engineering, National University of Singapore, Singapore 117576
Decision Analysis, 2015, vol. 12, issue 2, pages 74-80
There are instances where “most” individuals prefer one prospect over another in practice, but such preferences are not revealed by conventional stochastic dominance rules. Almost stochastic dominance aims to reveal such preferences. However, almost stochastic dominance does not reveal the preferences observed in the St. Petersburg paradox. In this paper, we generalize the conditions of almost stochastic dominance by introducing a weighting function and illustrate how our proposed condition reveals the preferences of most individuals in the St. Petersburg paradox.
Keywords: stochastic dominance; almost stochastic dominance; St. Petersburg paradox; utility; preference (search for similar items in EconPapers)
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Persistent link: http://EconPapers.repec.org/RePEc:inm:ordeca:v:12:y:2015:i:2:p:74-80
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