An Investigation of the Relationship Between Constraint Omission and Risk Aversion in Firm Risk Programming Models Academic Article

abstract

• AbstractA model with omitted resource constraints is suggested as an alternative to a risk aversion model for explaining economic behavior. This paper uses two standard mathematical programming models to further explore this issue. One model is a standard profit maximization linear programming model and the other is a risk averse quadratic programming model with part of the constraints deleted. Theoretical investigation of these models demonstrates that risk aversion can substitute for omitted resource constraints. A small empirical model is then solved under both formulations. With resource constraints deleted, positive risk aversion is necessary to obtain a similar enterprise organization as under profit maximization with complete constraints. These two solutions are then interpreted with the theoretical optimality conditions.

authors

• Mccarl, Bruce

published proceedings

• Southern Journal of Agricultural Economics

author list (cited authors)

• Musser, W. N., McCarl, B. A., & Smith, G. S.

citation count

• 7

complete list of authors

• Musser, Wesley N||McCarl, Bruce A||Smith, G Scott

publication date

• December 1986

publisher

• Cambridge University Press (CUP)  Publisher

published in

• Southern Journal of Agricultural Economics  Journal

keywords

• Patient Safety

Digital Object Identifier (DOI)

• 10.1017/s0081305200006191

start page

• 147

end page

• 154

volume

• 18

issue

• 2

URL

• http://dx.doi.org/10.1017/s0081305200006191