👉 Dock math, also known as stochastic dominance, is a method used in decision-making under uncertainty to compare different choices or portfolios. It involves comparing the cumulative distribution functions (CDFs) of two random variables, often representing different investment options or outcomes. The key idea is to determine if one option consistently provides better outcomes than the other across all possible scenarios, regardless of the specific distribution of returns. For instance, if the CDF of one option is always to the left (or above) that of another, it indicates that the first option has a higher probability of achieving better results. This method is particularly useful when dealing with non-normal distributions or when the exact probabilities are unknown, providing a robust framework for making informed decisions based on expected utility rather than just mean outcomes.
