Analyzing Consumer’s Behaviour in Risk and Uncertainty Situations

In the paper we will generalize the Slutsky Equation in risk and uncertainty situations using the compensated and uncompensated demand and some local measures of risk aversion. We will obtain a nonlinear optimization problem of maximizing the expected utility; this problem will be solved using the Kuhn-Tucker method. We use the results to analyze the income and substitution effects of price changes on demand in risk and uncertainty conditions.

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Year of publication:	2011
Authors:	Marinescu, Daniela Elena ; Marin, Dumitru ; Manafi, Ioana
Published in:	International Journal of Economic Practices and Theories. - Academia de Studii Economice din Bucureşti, ISSN 2247-7225. - Vol. 1.2011, 2, p. 51-57
Publisher:	Academia de Studii Economice din Bucureşti
Subject:	Compensated demand \| risk aversion \| Slutsky Equation \| uncertainty \| uncompensated demand

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Extent:	application/pdf
Type of publication:	Article
Language:	English
Classification:	C61 - Optimization Techniques; Programming Models; Dynamic Analysis ; D11 - Consumer Economics: Theory ; D53 - Financial Markets
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009416263