This note gives a simple, but useful characterization of optimism and pessimism represented by a convex and concave shift of probability weighting functions, and applies it to two comparative static analysis.

We consider an asset market traded three types of assets: the risk–free asset, the market portfolio and derivatives written on the market portfolio return. We determine a sufficient condition to guarantee that noise risk monotonically changes their derivatives. The condition is that...

This paper has two goals. First, we demonstrate that standard arguments and methods from production and duality analysis can be used to provide a comprehensive and general treatment of the value of information for a risk-averse firm with expected-utility (linear-in-probabilities) preferences and...

In the past year, climate change has moved from political controversy to political consensus; at least, in relation for price-based policies the need to limit emissions. Uncertainties remain but with both major parties proposing to develop an emissions trading regime, it is timely to highlight...

We present a definition of increasing uncertainty, in which an elementary increase in the uncertainty of any act corresponds to the addition of an `elementary bet' that increases consumption by a fixed amount in (relatively) `good' states and decreases consumption by a fixed (and possibly...

Quiggin and Chambers have introduced the notion of invariant preferences, and shown that the only invariant expected-utility functionals are those associated with a quadratic utility function. This note identifies the class of preferences which simultaneously satisfy invariance, two-fund...

In this chapter, we compare the experience of Australia and New Zealand over the period of microeconomic reform that began in the early 1980s. Of particular concern is the question of how New Zealand, with what were seen at the time as the ‘best’ set of economic policies in the OECD,...

The Murray-Darling Basin comprises over 1 million km2; it lies within four states and one territory; and over 12, 800 GL of irrigation water is used to produce over 40% of the nation's gross value of agricultural production. This production is used by a diverse collection of some-times mutually...

In a stochastic decision environment, differences in information can lead rational decision makers facing the same stochastic technology and the same markets to make different production choices. Efficiency and productivity measurement in such a setting can be seriously and systematically biased...

Most, if not all, production technologies are stochastic. This article demonstrates how data envelopment analysis (DEA) methods can be adapted to accommodate stochastic elements in a state-contingent setting. Specifically, we show how observations on a random input, not under the control of the...