IDEAS home Printed from https://ideas.repec.org/p/drm/wpaper/2010-7.html

Risk and Sustainability : Is Viability that far from Optimality?

Author

Listed:
  • Michel De Lara
  • Vincent Martinet
  • Luc Doyen

Abstract

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.

Suggested Citation

  • Michel De Lara & Vincent Martinet & Luc Doyen, 2010. "Risk and Sustainability : Is Viability that far from Optimality?," EconomiX Working Papers 2010-7, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2010-7
    as

    Download full text from publisher

    File URL: http://economix.fr/pdf/dt/2010/WP_EcoX_2010-07.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:drm:wpaper:2010-7. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Valerie Mignon The email address of this maintainer does not seem to be valid anymore. Please ask Valerie Mignon to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/modemfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.