uncertainty. The firm faces additional sources of uncertainty that are aggregated into a background risk. We show that the firm … attitude of the firm and the incidence of the underlying uncertainty. We further show that the firm's optimal input mix depends …. -- 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 …

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

We examine the economic behavior of the regret-averse firm under price uncertainty. We show that the global and … marginal effects of price uncertainty on production are both positive (negative) when regret aversion prevails if the random …

The paper revisits the impact of uncertainty on the decision problem of a bank. The bank extends risky loans to private … investors and sells deposits to savers at fixed rates. The uncertainty under which deposit/loan-portfolios are chosen by banks …

uncertainty when the firm's preferences exhibit smooth ambiguity aversion. Ambiguity is modeled by a second-order probability … distribution that captures the firm's uncertainty about which of the subjective beliefs govern the exchange rate risk. Ambiguity …

This paper examines the behavior of the regret-averse multinational firm under exchange rate uncertainty. The … less, sells more domestically, and export less abroad under uncertainty than under certainty holds if the multinational … value or a high value with positive probability, we show that the multinational firm may optimally produce more, sell less …

-order probability distribution that captures the bank's uncertainty about which of the subjective beliefs govern the financial asset …

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 …