Moment conditions for Almost Stochastic Dominance

- We establish necessary conditions for Almost Stochastic Dominance criteria.
- These conditions are in the form of algebraic combinations of moments.
- They depend on the order of ASD but not on the critical value.
- They help to reduce the information requirement and computational burden.
- We present a numerical example and an empirical application to illustrate them.

This study establishes necessary conditions for Almost Stochastic Dominance criteria of various orders. These conditions take the form of restrictions on algebraic combinations of moments of the probability distributions in question. The relevant set of conditions depends on the relevant order of ASD but not on the critical value for the admissible violation area. These conditions can help to reduce the information requirement and computational burden in practical applications. A numerical example and an empirical application to historical stock market data illustrate the moment conditions. The first four moment conditions in particular seem appealing for many applications.