Ordinal dominance and risk aversion
Bulat Gafarov () and
Bruno Salcedo ()
Economic Theory Bulletin, 2015, vol. 3, issue 2, 287-298
Abstract We find that, for sufficiently risk-averse agents, strict dominance by pure or mixed actions coincides with dominance by pure actions in the sense of (Börgers in Econometrica 61(2):423–430, 1993), which, in turn, coincides with the classical notion of strict dominance by pure actions when preferences are asymmetric. Since risk aversion is a cardinal feature, all finite single-agent choice problems with ordinal preferences admit compatible utility functions which are sufficiently risk averse as to achieve equivalence between pure and mixed dominance. This result extends to some infinite environments.
Keywords: Rationalizability; Dominance; Risk aversion; Ordinal preferences; Revealed preferences (search for similar items in EconPapers)
JEL-codes: D81 C72 (search for similar items in EconPapers)
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