Tests for Laplace order dominance with applications to insurance data

Abstract

Tests for Laplace order dominance are proposed in the contexts of both one-sample and two-sample problems utilizing a weighted integral as measure of deviation. The concerned test statistics are shown to be asymptotically normal and consistency of both the tests is established. The performance of the proposed test procedures is assessed by means of a simulation study. Finally, the tests are applied to insurance data for illustrative purposes and actuarial implications derived from the tests are also presented.