Comparison of the production behavior of regret-averse and purely risk-averse firms
Abstract: Previous studies focused on the comparison of the optimal output levels of regret- averse firms under uncertainty and firms under certainty. This paper extends the theory by further investigating the effects of regret-aversion on production. We compare the optimal output levels of regret-a...
| Autores: | , |
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| Tipo de recurso: | artículo |
| Estado: | Versión publicada |
| Fecha de publicación: | 2019 |
| País: | Chile |
| Institución: | Agencia Nacional de Investigación y Desarrollo |
| Repositorio: | SciELO Chile |
| OAI Identifier: | oai:scielo:S0718-52862019000200157 |
| Acceso en línea: | http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862019000200157 |
| Access Level: | acceso abierto |
| Palabra clave: | Production regret aversion risk aversion uncertainty |
| Sumario: | Abstract: Previous studies focused on the comparison of the optimal output levels of regret- averse firms under uncertainty and firms under certainty. This paper extends the theory by further investigating the effects of regret-aversion on production. We compare the optimal output levels of regret-averse firms with purely risk- averse firms under uncertainty and firms under certainty. We first show that the linear-regret firms will surely produce more than their purely risk-averse counterparts and surely produce less than firms under certainty. Thereafter, we give sufficient conditions to ensure the regret-averse firms to produce more than the purely risk-averse counterparts and study the comparative statics of the optimal production. We also develop properties of regret-aversion on production. |
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