Optimal Entrepreneurial Decisions in a Completely Stochastic Environment
This paper develops a normative model of the entrepreneur's decision problem in which the following elements are stochastic: the entrepreneur's preferences, his lifetime, the returns from investments, and the process obeyed by the interest rate. Furthermore, the entrepreneur's preferences are assumed to be sensitive to the opportunities facing him at each decision point as well as other environmental factors. At each decision point the entrepreneur must decide how to allocate his resources between consumption, life insurance, various investment opportunities, and lending/borrowing. His objective is postulated to be the maximization of expected utility from consumption as long as he lives and from the bequest left upon his death. Optimal decision functions are obtained in closed form for a class of utility functions; their properties are examined and compared to those of the optimal strategies of less general models.
Volume (Year): 17 (1971)
Issue (Month): 7 (March)
|Contact details of provider:|| Postal: |
Web page: http://www.informs.org/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:17:y:1971:i:7:p:427-449. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.