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La prise de décision en situation d’incertitude

Listed author(s):
  • Drèze, Jacques H.

    (Université Catholique de Louvain)

A conceptual framework is provided by the "states of the world" approach (reviewed in section 1). The powerful normative analysis of individual decision-making under uncertainty extends the theory of consumer choice under certainty into an adequate specification of individual norms of behavior (section 2). But the link with observable market phenomena would require the existence of a complete set of insurance markets, one for every commodity conditionally on every state of the world. Although some disagreement persists on this point, the author feels that the insurance and asset markets which exist in western economies fall substantially short of offering trading opportunities comparable to those implied by a complete set of insurance markets. Consequently, consumer preferences are incompletely revealed by market prices. And business firms lack the information required to reach decisions by mere arithmetic comparisons of alternative profit levels (section 3). Management under uncertainty and incomplete markets acquires genuine significance. What norms of managerial behavior should be assumed for positive economic analysis is a disputed issue. From a normative viewpoint, managerial decisions must be viewed as group decisions, with consequences affecting many individuals—and the theory of such decisions is by necessity more complex (section 4).

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Article provided by Société Canadienne de Science Economique in its journal L'Actualité économique.

Volume (Year): 55 (1979)
Issue (Month): 2 (avril)
Pages: 129-150

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Handle: RePEc:ris:actuec:v:55:y:1979:i:2:p:129-150
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  1. Radner, Roy, 1970. "Problems in the Theory of Markets under Uncertainty," American Economic Review, American Economic Association, vol. 60(2), pages 454-460, May.
  2. Sheshinski, Eytan & Dreze, Jacques H, 1976. "Demand Fluctuations, Capacity Utilization, and Costs," American Economic Review, American Economic Association, vol. 66(5), pages 731-742, December.
  3. J. Tobin, 1958. "Liquidity Preference as Behavior Towards Risk," Review of Economic Studies, Oxford University Press, vol. 25(2), pages 65-86.
  4. J. E. Stiglitz, 1972. "On the Optimality of the Stock Market Allocation of Investment," The Quarterly Journal of Economics, Oxford University Press, vol. 86(1), pages 25-60.
  5. Hirshleifer, Jack, 1971. "The Private and Social Value of Information and the Reward to Inventive Activity," American Economic Review, American Economic Association, vol. 61(4), pages 561-574, September.
  6. Officer, Lawrence H, 1974. "Purchasing Power Parity and Factor Price Equalization," Kyklos, Wiley Blackwell, vol. 27(4), pages 868-878.
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