Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
CONSUMER CHOICE INVOLVING RISK:
The traditional theory of consumer behaviour does not include an analysis of uncertain situation. Von Neumann and Morgenstern showed that under some circumstances it is possible to construct a set of numbers for a particular consumer that can be used to predict her choices in uncertain situations. However, there is a great controversy that has centered around the question of whether the resulting utility index is ordinal or, cardinal. It will be shown that Von Neumann - Morgenstern utilities possess at least some cardinal properties.
It has been pointed out above that consumer behaviour analysis is unrealistic in the sense that it assumes actions the consumer are followed by determinate consequences which are knowable in advance. For instance, all automobiles of the same model and produced in the same factory will not always have the same performance characteristics. As a result of random accidents in the production process, some substandard automobiles could be occasionally produced and sold. The consumer has no way of knowing ahead of time whether the particular automobile, which she purchased, is of standard quality or not.
Let A represent the situation in which the consumer possesses a standard quality automobile and B be a situation in which she does not. Again, let there be C, in which she possesses a substandard automobile. Assume that the consumer prefers A to B and B to C. That is, not having a car is assumed preferable to owning a substandard one because of the nuisance and expense involved in its uptake. Present her with a choice between two alternatives: (1) She can maintain the status quo and have no car at all. This is a choice with certain outcome i.e., the probability of the outcome equals unity. (2) She can obtain a lottery ticket with a chance of winning either a satisfactory automobile (alternative A) or an unsatisfactory one (alternative C). The consumer may prefer to retain her income (or money) with certainty, or she may prefer the lottery ticket with dubious outcome, or she may be indifferent between them. Her decision will depend upon the chances of winning or losing in this particular lottery. If the probability of C is very high, she might prefer to retain her money with certainty; if the probability of A is very high, she might prefer the lottery ticket. The triplet of numbers (P, A, B) is used to denote a lottery offering outcome A with probability 0
what are the merits and demerits of deductive inductive methods in economic analysis?
What happens to the market for cchicken wings if the price of beer increases?
bain''s model of limit pricing with diagram
any village panchayat in west bengal and get information for doing a project.
STRUCTURE OF NATIONAL INCOME: The structure or composition of national income of an economy explains the relative significance of the different producing sectors in an economy
What is the conditional mean: For every AR(1) model below: a. Do a three-period ahead forecasting using the given initial values and statistics. Write a 95% confidence int
CAUSES OF SLOW GROWTH: A recent empirical study seeks to explain statistically the variations in inter-country growth rates. The global pattern of growth is shown to depend on
causes for emergency of monopoly
What is the arc cross elasticity of demand between Stop decay''s toothbrush and Decay fighter''s toothbrush? What does this indicate about the relationship between the two products
A spherical wave is reflected from a planar mirror sufficiently far from the wave origin so that the Fresnel approximation is satisfied. By regarding the spherical wave locally as
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd