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Optimal output for the regret-averse competitive firm under price uncertainty

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  • Martín Egozcue
  • Xu Guo
  • Wing-Keung Wong

Abstract

We study the optimal output of a competitive firm under price uncertainty. Instead of assuming a risk-averse firm, we assume that the firm is regret-averse. We find that optimal output under uncertainty would be lower than under certainty. We also prove that optimal output could increase or decrease when the regret factor varies. Copyright Eurasia Business and Economics Society 2015

Suggested Citation

  • Martín Egozcue & Xu Guo & Wing-Keung Wong, 2015. "Optimal output for the regret-averse competitive firm under price uncertainty," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 5(2), pages 279-295, December.
    • Handle: RePEc:spr:eurase:v:5:y:2015:i:2:p:279-295
    DOI: 10.1007/s40822-015-0030-9
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    6. Chang, C-L. & McAleer, M.J. & Wong, W.-K., 2018. "Decision Sciences, Economics, Finance, Business, Computing, and Big Data: Connections," Econometric Institute Research Papers 18-024/III, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    7. Alghalith, Moawia, 2016. "A note on the theory of the firm under multiple uncertainties," European Journal of Operational Research, Elsevier, vol. 251(1), pages 341-343.
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    More about this item

    Keywords

    Optimal output; Competitive firm; Risk aversion ; Regret aversion; Decision making; D00; D03; D21;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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