Ranking Statistical Experiments via the Linear Convex Order and the Lorenz Zonoid: Economic Applications

Kailin Chen

Papers from arXiv.org

Abstract: This paper introduces a novel ranking of statistical experiments, the Linear-Blackwell (LB) order, equivalently characterized by (i) more dispersed posteriors and likelihood ratios in the sense of the linear convex order, (ii) a larger Lorenz zonoid--the set of statewise profiles spanned by signals, and (iii) greater variability of the posterior mean. We apply the LB order to compare experiments in binary-action decision problems and in problems with quasiconcave payoffs, as analyzed by Kolotilin, Corrao, and Wolitzky (2025). Furthermore, the LB order enables the comparison of experiments in moral hazard problems, complementing the findings in Holmstr\"om (1979) and Kim (1995). Finally, the LB order applies to the comparison of experiments generating ex post signals in screening problems.

Date: 2025-02, Revised 2025-10
New Economics Papers: this item is included in nep-exp
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