Risk and Sustainability: Is Viability that far from Optimality?
Economic analysis addresses risk and long-term issues with discounted expected utility, focusing on optimality. Viability theory is based on sustainability constraints to be satisfied over time, focusing on feasibility. We make a bridge between these two approaches by showing that viability is equivalent to an array of degenerate intertemporal optimization problems. This makes the approach more interpretable in economic terms, and especially regarding efficiency. First, the deterministic case is examined. A particular emphasis is put on the connections between the viability kernel and the minimal time of crisis function. Then, we present stochastic viability with the notions of viable scenario and maximal viability probability. We show that the maximal viability probability shares dynamic programming properties with optimal discounted expected utility. Thus, both exhibit time-consistency, which may be a basis for an axiomatization of criteria under risk and long run for public decision-making.
|Date of creation:||01 Feb 2010|
|Contact details of provider:|| Postal: BP 01, 78850 Thiverval Grignon|
Phone: 01 30 81 53 30
Fax: 01 30 81 53 68
Web page: http://www4.versailles-grignon.inra.fr/economie_publique_eng
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cheve, M. & Schubert, K., 1999. "La croissance optimale d'une economie polluante: durabilite economique versus durabilite ecologique," Papiers d'Economie MathÃ©matique et Applications 1999.47, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Philippe Artzner & Freddy Delbaen & Jean-Marc Eber & David Heath, 1999. "Coherent Measures of Risk," Mathematical Finance, Wiley Blackwell, vol. 9(3), pages 203-228.
- Martin L. Weitzman, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 703-724, September.
- Stefan Baumgärtner & Martin F. Quaas, 2007.
"Ecological-economic viability as a criterion of strong sustainability under uncertainty,"
Working Paper Series in Economics
67, University of Lüneburg, Institute of Economics.
- Baumgärtner, Stefan & Quaas, Martin F., 2009. "Ecological-economic viability as a criterion of strong sustainability under uncertainty," Ecological Economics, Elsevier, vol. 68(7), pages 2008-2020, May.
- Martinet, Vincent & Thebaud, Olivier & Doyen, Luc, 2007.
"Defining viable recovery paths toward sustainable fisheries,"
Elsevier, vol. 64(2), pages 411-422, December.
- Vincent Martinet & Olivier Thébaud & Luc Doyen, 2007. "Defining viable recovery path toward sustainable fisheries," Post-Print hal-01186921, HAL.
- Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
- Graciela Chichilnisky, 1996.
"An axiomatic approach to sustainable development,"
Social Choice and Welfare,
Springer;The Society for Social Choice and Welfare, vol. 13(2), pages 231-257, April.
- Vincent Martinet, 2009. "Defining sustainability objectives," EconomiX Working Papers 2009-7, University of Paris West - Nanterre la Défense, EconomiX.
- V.Martinet & L. Doyen, 2003. "Sustainable management of an exhaustible resource:a viable control model," THEMA Working Papers 2003-36, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Richard B. Howarth, 1995. "Sustainability under Uncertainty: A Deontological Approach," Land Economics, University of Wisconsin Press, vol. 71(4), pages 417-427.
- Krawczyk, Jacek & Kim, Kunhong, 2009. "Satisficing Solutions To A Monetary Policy Problem," Macroeconomic Dynamics, Cambridge University Press, vol. 13(01), pages 46-80, February.
- Shaw, W. Douglass & Woodward, Richard T., 2008. "Why environmental and resource economists should care about non-expected utility models," Resource and Energy Economics, Elsevier, vol. 30(1), pages 66-89, January.
- Béné, C. & Doyen, L., 2008. "Contribution values of biodiversity to ecosystem performances: A viability perspective," Ecological Economics, Elsevier, vol. 68(1-2), pages 14-23, December.
- Bene, C. & Doyen, L. & Gabay, D., 2001. "A viability analysis for a bio-economic model," Ecological Economics, Elsevier, vol. 36(3), pages 385-396, March.
When requesting a correction, please mention this item's handle: RePEc:apu:wpaper:2010/02. 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: (RÃ©gis Grateau)
If references are entirely missing, you can add them using this form.