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Consider two lotteries A = {p0, 0; p1, 1; 1 - p0 - p1, 2} and B = {q0, 0; q1, 1; 1 - q0
Consider two lotteries A = {p0, 0; p1, 1; 1 - p0 - p1, 2} and B = {q0, 0; q1, 1; 1 - q0 - q1, 2}. Questions: 1. Define first order stochastic dominance and single mean preserving spread. 2. Give the conditions on (p0, p1) and (q0, q1) for: (i) A first order stochastically dominates B, (ii) B is a single mean preserving spread of A.
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Microeconomics
Authors: Douglas Bernheim, Michael Whinston
2nd edition
73375853, 978-0073375854
