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Tests for almost stochastic dominance

Amparo Baíllo, Javier Cárcamo, Carlos Mora-Corral

arXiv 22 Mar 2024 · Econometrics · publishedJournal of Business and Economic Statistics (2024) · 2 citations (OpenAlex)

arXiv:2403.15258 · PDF · DOI · OpenAlex · Extracted main text

Abstract

We introduce a 2-dimensional stochastic dominance (2DSD) index to characterize both strict and almost stochastic dominance. Based on this index, we derive an estimator for the minimum violation ratio (MVR), also known as the critical parameter, of the almost stochastic ordering condition between two variables. We determine the asymptotic properties of the empirical 2DSD index and MVR for the most frequently used stochastic orders. We also provide conditions under which the bootstrap estimators of these quantities are strongly consistent. As an application, we develop consistent bootstrap testing procedures for almost stochastic dominance. The performance of the tests is checked via simulations and the analysis of real data.

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38
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in-text mentions
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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Huang, Y.–C., Kan, K., Tzeng, L. Y., and Wang, K. C (2021) Estimating the critical parameter in almost stochastic dominance from insurance deductibles1.00053100%
2Fang, Z., and Santos, A (2019) Inference on directionally differentiable functions0.87452100%
3Levy, H (2012) Almost stochastic dominance and efficient investment sets0.84333100%
4Sun, Z., and Beare, B. K (2021) Improved nonparametric bootstrap tests of Lorenz dominance0.81142100%
5Baíllo, A., Cárcamo, J. and Mora-Corral, C (2022) Extreme points of Lorenz and ROC curves with applications to inequality analysis self0.73732100%
6Leshno, M., and Levy, H (2002) Preferred by “all" and preferred by “most" decision makers: Almost stochastic dominance0.73732100%
7Linton, O., Song, K. and Whang, Y. J (2010) An improved bootstrap test of stochastic dominance0.73732100%
8Barrett, G. F., Donald, S. G., and Bhattacharya, D (2014) Consistent nonparametric tests for Lorenz dominance0.64422100%
9Grafakos, L (2008) Classical Fourier Analysis0.64422100%
10Levy, H (2016) Stochastic Dominance: Investment Decision Making under Uncertainty0.64422100%

Showing the top 10 of 58 scored citations.