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Risk Preference in Economics of Uncertainty
Huang Chun, Yu Ze, Li Bin
Teaching and Research
2005, (4):
54-59.
Classical theory of western economics mainly analyzes the allocation efficiency under certainty. The general feature of economic environment, however, is uncertainty. Analysis of uncertainty is related to the understanding of essence of economic phenomena. Choice theory under uncertainty is the behavioral foundation of economic analysis. Two fundamental problems of choice theory under uncertainty are risk preference and probability. This paper shows the development of risk preference theory, and describes the challenge which is raised by modern development of choice theory under uncertainty to expected utility theory in the view of risk preference theory.
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