A decisionmaker wishes to pick b to maximize E[u(z(x,b))] where x is a random variable. A shift in the probability density function of x from f(x) to g(x) is considered where g(x) can be interpreted as representing greater uncertainty. A set of conditions on the behavior of the ratio of f(x) to g(x) over the support of x are derived sufficient to sign the effect of the shift on the decision variable. Copyright 1989 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 30 (1989) Issue (Month): 1 (February) Pages: 119-30 Download reference. The following formats are available: HTML
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