An improved bootstrap test of stochastic dominance

We propose a new method of testing stochastic dominance that improves on existing tests based on the standard bootstrap or subsampling. The method admits prospects involving infinite as well as finite dimensional unknown parameters, so that the variables are allowed to be residuals from nonparametric and semiparametric models. The proposed bootstrap tests have asymptotic sizes that are less than or equal to the nominal level uniformly over probabilities in the null hypothesis under regularity conditions. This paper also characterizes the set of probabilities so that the asymptotic size is exactly equal to the nominal level uniformly. As our simulation results show, these characteristics of our tests lead to an improved power property in general. The improvement stems from the design of the bootstrap test whose limiting behavior mimics the discontinuity of the original test’s limiting distribution.     

Did financial deregulation help consumers? Access to market-yield instruments

The maturity effect (ME) of futures prices postulated by Samuelson (1965) is re-examined using three nonparametric tests. The consistent entropy asymmetry test by Racine and Maasoumi (2007) indicates that variance is an appropriate risk or uncertainty measure for ME, and value-at-risk and expected shortfall are also adopted. The Kolmogorov–Smirnov dominance test and Wilcoxon rank sum and signed rank test are employed to rank the estimates of the three risk measures under a moving-window framework. The testing outcomes are contingent on futures type, testing method and risk measures. The testing outcomes show mild support for ME.     

Qualitative valuation of environmental criteria through a group consensus based on stochastic dominance

This paper introduces a qualitative valuation method to elicit stakeholders' intensities of preferences for a complex environmental issue and multiple social groups. Environmental valuation studies have shown that in any complex environment with a diversity of environmental services, stakeholders have difficulties using a monetary valuation to make trade-offs between different environmental services. Stated preference methods such as the Contingent Valuation Method (CVM) have been criticised for their individualistic format and assumptions of commensurability between environmental criteria. To alleviate both of these criticisms, we propose a qualitative valuation method. The method contains a discursive step to allow stakeholders to discuss and construct a list of environmental criteria and alternative plans. The list of criteria and plans is subsequently used by a group of experts to formulate an Impact Matrix (IM), which is to be used in the succeeding individualistic steps of the methodology. The first individualistic step consists of asking the stakeholders to rank Alternative Impacts (AIs) in the IM for each single criterion. The stakeholders are then asked to express intensities of their preferences through pairwise comparisons between the AIs of the constructed rank order on each single criterion. These intensities are expressed on a qualitative scale. Subsequently, to provide social intensities of preferences, a social preference (social rank order) is first determined for each single criterion. We propose to use the median value among the intensities of preferences as the social intensity of preference by assuming interpersonal comparability and taking into account stochastic monotonocity. This is a pre-processing step, which allows us to reach social intensities of preferences in the Lar rangeland (Iran), where several social groups have conflicting interests on rangeland services, leading to conflicting preferences on environmental criteria.     

Assessing market dominance

We propose a new measure to assess market dominance. Contrary to concentration measures such as the Herfindahl–Hirschman index that characterizes the concentration of an industry, our dominance measure suggests an approach that classifies when an individual firm has a dominant position. In our measure, the criterion for dominance is relaxed as the intensity of existing competition increases or as entry barriers are lowered. We apply the dominance measure to a number of well-known competition cases.     

Spatial Comparisons of Poverty and Inequality in Living Standards in Malawi

The paper looks at poverty and inequality across areas in Malawi. The focus is on both monetary (consumption) and non‐monetary (health and education) dimensions of well‐being. Stochastic poverty dominance tests show that rural areas are poorer in the three dimensions regardless of poverty line chosen. Stochastic inequality dominance tests find that the north and south dominate the centre in health inequality, and there is no dominance between the north and south. With respect to education inequality, dominance is declared for the south‐centre pair only. A subgroup decomposition analysis finds that the south contributes the most to consumption and education poverty, while the centre is the largest contributor to health poverty. We establish that within‐area inequalities (vertical inequalities) rather than between‐area inequalities (horizontal inequalities) are the major driver of consumption, health and education inequality in Malawi.     

Payoff dominance and risk dominance in the observable delay game: a note

We examine whether the payoff dominant sequential-move (Stackelberg) outcome is realized when timing is endogenized. We adopt the observable delay game formulated by Hamilton and Slutsky [Games Econ Behav 2(1):29–46, 1990]. We find that if one sequential-move outcome is payoff dominant, either (i) the outcome both players prefer is the unique equilibrium; or (ii) two sequential-move outcomes are equilibria and the one both players prefer is risk dominant. In other words, no conflict between payoff dominance and risk dominance in the observable delay game exists, in contrast to other games such as (non pure) coordination games. We also find that even if one of two sequential-move outcomes is the unique equilibrium outcome in the observable delay game, it does not imply that the equilibrium outcome is payoff dominant to the other sequential-move outcome.      

劳动分工取代自给自足的演化分析

劳动分工取代自给自足面临着两个主要挑战:分工的协调问题和自给自足策略的风险占优问题。进行制度分析和演化博弈分析后我们可以得出如下结论:分工的协调问题可以通过优胜劣汰的自然选择自动解决;自给自足的风险占优问题则要通过建立"城市"、"集市"等制度来解决。     

Cost-Effective and Stochastic Dominance Approaches to Stochastic Pollution Control

Most economic studies of pollution externalities focus on the relative efficiency or cost-effectiveness of alternative pollution control instruments. Much less attention has been paid to policy goals and objectives. However, a comprehensive pollution control strategy depends on all of these choices. This paper examines several efficiency properties of cost-effective pollution control strategies in a stochastic setting when economic damages from pollution are unknown. A number of policy goals are considered. In this setting and under a primal approach, it is found that certain stochastic dominance conditions must be satisfied for the strategies to exhibit desirable efficiency properties. A dual approach to cost-effective pollution control, which is based on a stochastic dominance objective, is also considered.     

Fuzzy Pair-wise Dominance and Implications for Technical Efficiency Performance Assessment

Classically, the concept of efficiency measurement is based on the definition of a frontier that envelops the observed production plans. The efficiency score itself is based on the distance of an observed production plan from this frontier. The frontier along with the required technological assumptions (such as convexity) needed for its definition may be replaced with the concept of pair-wise dominance. This concept leads to a classification scheme for all production plans instead of a ranking based on efficiency scores. Also, the traditional assumption of deterministic or crisp production plans may be substituted with the weaker assumption of fuzzy production plans as proposed by fuzzy set theory. This paper merges these two concepts and defines a new classification scheme based on fuzzy dominance.