EconPapers    
Economics at your fingertips  
 

Regret theory and the competitive firm: A comment

Cuizhen Niu, Xu Guo (liushengjunyi@163.com), Tao Wang and Peirong Xu

Economic Modelling, 2014, vol. 41, issue C, 312-315

Abstract: In a recent paper, Wong [Wong, K. P. (2014), Regret theory and the competitive firm. Economic Modelling, 36, 172–175.] develops a model to examine the production behavior of a regret averse competitive firm. Wong discusses the sufficient condition to ensure the conventional result that the optimal output level under uncertainty is less than that under certainty hold. Our contributions in this note are two-fold. Firstly, we point out that Wong's condition in terms of the first order derivatives of the utility function and the regret function is actually not sufficient. Secondly and more importantly, we show that a sufficient condition should be in terms of the relatively increase rate of the first order derivatives of the two functions. That's, it's the ratio of the risk aversion and regret aversion degree that matters. Our proposed condition requests that the firm should be not too regret averse.

Keywords: Production; Regret theory; Uncertainty (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999314002107
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:41:y:2014:i:c:p:312-315

DOI: 10.1016/j.econmod.2014.05.031

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu (repec@elsevier.com).

 
Page updated 2024-12-28
Handle: RePEc:eee:ecmode:v:41:y:2014:i:c:p:312-315