NECESSARY CONDITIONS FOR COMPARATIVE STATICS UNDER UNCERTAINTY

We investigate the comparative static properties of three classes of C DF changes: first and second degree stochastic dominant shifts, and me an preserving contractions. For each class, we provide conditions that are necessary and sufficient for a dominating shift to cause an unamb iguous change in the choice variable. This allows us to see the trade- offs one must make between restrictions on preferences and CDF changes to obtain interesting comparative statics results. We then investigat e the implications of our results for the two-period consumption-savin gs models and for distinguishing agents that do and do not obey the ex pected utility hypothesis.