Investment Decisions and Normalization with Incomplete Markets: A Pitfall in Aggregating Shareholders' Preferences

Luigi Ventura

International Journal of Business and Economics, 2004, vol. 3, issue 1, 21-28

Abstract: Profit maximization is not a well defined objective when markets are incomplete. Several criteria of investment choice have therefore been put forward in the literature, some of which crucially hinge upon aggregation of shareholders' preferences, as is the case with the criteria proposed by Dreze (1974) and Grossman and Hart (1979). This note shows that these criteria are normalization dependent, i.e., their outcome depends on the good chosen to express individuals' marginal rates of substitution.

Keywords: investment decisions; normalization; incomplete markets (search for similar items in EconPapers)
JEL-codes: D52 D70 D81 (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://ijbe.fcu.edu.tw/assets/ijbe/past_issue/No.03-1/pdf/vol_3-1-3.pdf (application/pdf)
https://ijbe.fcu.edu.tw/assets/ijbe/past_issue/No.03-1/abstract/03.html (text/html)

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:ijb:journl:v:3:y:2004:i:1:p:21-28

Access Statistics for this article

International Journal of Business and Economics is currently edited by Hsiang-Tsai Chiang (Editor-in-Chief), Chiung-Ju Huang (Editor-in-Chief), Feng-Jyh Lin (Associate Editor), Tzu-Ching Weng (Associate Editor), Hsin-Yi Huang (Managing Editor) and Szu-Hsien Ho (Managing Editor)

More articles in International Journal of Business and Economics from School of Management Development, Feng Chia University, Taichung, Taiwan Contact information at EDIRC.
Bibliographic data for series maintained by Szu-Hsien Ho ().