Survival under Production Uncertainty

Mukul Majumdar and Roy Radner

Chapter 8 in Equilibrium and Dynamics, 1992, pp 179-200 from Palgrave Macmillan

Abstract: Abstract In this study we explore some questions related to the’ survival’ and ‘failure’ of an economic agent. Our theme is unquestionably removed from the mainstream of analysis in economics, where the emphasis is on optimisation — more on ‘achieving the best’ than on ‘averting failure’. Given some institutional constraints, however, the behaviour of some economic agent (a consumer, a manager of a firm, a small farmer) can perhaps be modelled more realistically as a sequence of decisions meeting a minimal level of some performance index (a nutritional requirement, a minimal rate of dividend, a minimal level of debt service). In what follows, a number of issues will be pursued in simple partial equilibrium frameworks, where the outcome resulting from an action is subjected to exogenous random shocks.

Keywords: Markov Chain; Positive Probability; Economic Agent; Debt Service; Initial Stock (search for similar items in EconPapers)
Date: 1992
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DOI: 10.1007/978-1-349-11696-6_8

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