This paper examines the interplay between the real and financial decisions of the competitive firm under output price …. -- Background risk ; Capital structure ; Price uncertainty …

. -- Prospect theory ; mean-variance model ; indifference curve ; price uncertainty ; hedging …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 …

Within the prospect theory the paper examines production and hedging decisions of a competitive firm under price … theory, mean-variance model, price uncertainty … uncertainty. We consider the prospect theory for the firm's utility function in the two moment model known as (mu …