In this paper, we derive constrained optimal investment strategies for long-term savers who are interested in investing their funds in stocks, but are afraid of potentially losing, for example, their retirement income. We call this probability hedging as it is determined by the probability of...

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...