The prospect theory is one of the most popular decision-making theories. It is based on the S-shaped utility function …, unlike the von Neumann and Morgenstern (NM) theory, which is based on the concave utility function. The S-shape brings in … mathematical challenges: simple extensions and generalizations of NM theory into the prospect theory cannot be frequently achieved …

uncertainty. The firm faces additional sources of uncertainty that are aggregated into a background risk. We show that the firm … always chooses its optimal debt-equity ratio to minimize the weighted average cost of capital, irrespective of the risk …. When the background risk is either additive or multiplicative, we provide reasonable restrictions on the firm's preferences …

spatial concentration of economic activity depends upon properties of risk preferences deeper than risk aversion. The degree … of so-called relative prudence unambiguously decides whether or not the diversi cation of income risk favours the … geographic dispersion of economic activity. In our framework we relate risk diversi cation with economic integration. Then there …

firm and the degree of risk aversion …

impact of economic risk and risk preferences upon regional allocation of investments. The source of risk stems from the … upon the firms' risk preferences. As a result regional agglomeration of investments may occur although the objective of the … elasticity of risk aversion. Elements of risk preferences beyond risk aversion prove to be very important to evaluate regional …

Instruments of risk mitigation play an important role in managing country risk within the foreign direct investment … (FDI) decision. Our study assesses country risk by state-dependent preferences and introduces futures contracts as a tool … of risk mitigation. We show that country risk assessments related to foreign direct investment do not matter if the …

We study the impact of exchange rate risk upon export production within an emerging economy lacking in currency forward … firm benefits from imperfectly hedging exchange rate risk …

We present a model of risk averse exporting firm subject to liquidity constraints. The firm enters an unbiased futures … market to hedge exchange rate risk and may not be able to satisfy high margin calls. Then the firm is forced to prematurely …

risk aversion aspects of enterprises, it is demonstrated that situations characterized by enhanced exchange rate volatility …