Analyzing Consumer's Behaviour in Risk and Uncertainty Situations

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Provided by: Creative Commons
Topic: E-Commerce
Format: PDF
The risk and uncertainty concepts have been rather recently introduced in the economic field. In the paper, the authors will generalize the Slutsky equation in risk and uncertainty situations using the compensated and uncompensated demand and some local measures of risk aversion. They will obtain a nonlinear optimization problem of maximizing the expected utility; this problem will be solved using the Kuhn-Tucker method. They use the results to analyze the income and substitution effects of price changes on demand in risk and uncertainty conditions.
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