Economic Theory Bulletin

, Volume 3, Issue 2, pp 287–298

Ordinal dominance and risk aversion

Research Article

DOI: 10.1007/s40505-014-0059-z

Cite this article as:
Gafarov, B. & Salcedo, B. Econ Theory Bull (2015) 3: 287. doi:10.1007/s40505-014-0059-z
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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 

JEL Classification

D81 C72 

Copyright information

© Society for the Advancement of Economic Theory 2014

Authors and Affiliations

  1. 1.The Pennsylvania State UniversityUniversity ParkUSA
  2. 2.The Pennsylvania State UniversityUniversity ParkUSA
  3. 3.National Research University Higher School of EconomicsMoscowRussia

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