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Risk and Sustainability: Is Viability that far from Optimality?

Author

Listed:
  • Michel de Lara
  • Vincent Martinet

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Luc Doyen

Abstract

Economic analysis addresses risk and long-term issues with dis-counted expected utility, focusing on optimality. Viability theory is based on sustainability constraints to be satis ed over time, focusing on feasibility. We make a bridge between these two approaches by showing that viability is equivalent to an array of degenerate inter-temporal optimization problems. This makes the approach more inter-pretable 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?," Working Papers hal-04140924, HAL.
    • Handle: RePEc:hal:wpaper:hal-04140924
    Note: View the original document on HAL open archive server: https://hal.science/hal-04140924
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    More about this item

    Keywords

    Sustainability; uncertainty; multicriteria; viability;
    All these 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

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