This book addresses itself primarily to economists, financial engineers and
mathematicians interested in theoretical models of financial derivatives
that have empirical and practical implications. Its basic methodology
employs the economic concept of stochastic dominance, a concept that
was introduced more than 50 years ago in a different context, in order to
explore some little-noticed elements of one of the most dynamic areas of
finance, the valuation of options. The research that underlies it took place
over a period of almost 40 years, starting in 1980 and continuing till now,
with some of the most interesting contributions appearing during the last
decade. The unified treatment that is presented here highlights its empirical significance, which has not been exhausted yet. Several potential research projects arising from its theoretical component are described in
individual chapters.