Stochastic dominance

{
  "id": "MLC-T-INS-003190",
  "term": "Stochastic dominance",
  "field": "Insurance and risk management",
  "definition": "A method for ranking uncertain outcomes or investment prospects by comparing their cumulative distribution functions. One prospect stochastically dominates another if any rational, risk-averse decision-maker would prefer it, regardless of their specific utility function. First-order stochastic dominance exists if the cumulative distribution function of one prospect is always less than or equal to that of another, while second-order dominance applies specifically to risk-averse individuals.",
  "url": "https://mlchart.com/terminology/insurance/stochastic-dominance/"
}