Mea culpa concerning problem 2B in the first midterm exam

In problem 2B of the first midterm exam, the sentence I intended to write was: “Identify the lottery pairs from this list in which there is first-order stochastic dominance”. The answer provided in the solutions is the correct answer for that question, and for grading purposes, I will also give full credit for that response. However, the sentence I wrote (“Identify the lottery pairs from this list in which there is first-order stochastic dominance but not second-order stochastic dominance”) is confusing, since by definition, the mere presence of first-order stochastic dominance guarantees that there is also second-order stochastic dominance for all six lottery pairs, so I will also give full credit for that response. Thankfully, there can be no confusion concerning problem 2C which asks students to Identify the lottery pairs in which there is second-order stochastic dominance but not first-order stochastic dominance. Only the (3,1) and (3,2) lottery pairs fit the problem 2C criterion.

Leave a Reply

Your email address will not be published. Required fields are marked *