Comparative Statics on the Left-Side Relatively Weak First-Degree Stochastic Dominance Order and Its Applications

Suyeol Ryu ; Iltae Kim

Research Fellow, Busan Development Institute, Busan, Republic of Korea, Tel: +82-51-640-2025 ryusuyeo@bdi.re.kr
Professor, Department of Economics and Management Research Institute, Chonnam National University, Gwangju 500-757, Republic of Korea, Tel: +82-62-530-1550 kit2603@chonnam.ac.kr

JEL Classification: D81

Abstract

This paper proposes a new concept of the left-side relatively weak first-degree stochastic dominance (L-RWFSD) order that extends the monotone likelihood ratio (MLR) order and the left-side monotone likelihood ratio (L-MLR) order. We show that this shift is a larger subset of FSD shifts than the MLR shift and the L-MLR shift that derive the same comparative statics results.

Keywords:

Left-side relatively weak first-degree stochastic dominance, Monotone likelihood ratio order, Left-side monotone likelihood ratio order

Acknowledgments

The authors would like to thank anonymous referees for insightful comments.

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