We present a dynamic model of economic behavior of an owner-operated firm under bounded rationality, and develop the implications for the assessment of economic efficiency and the understanding of entrepreneurship. Under bounded rationality, information about technology and market conditions is...

This paper investigates the microeconomics of diversification, based on a two-period model of an owner-managed firm facing uncertainty. The analysis utilizes a general state-contingent representation of uncertainty and learning. Economies of diversification are defined based on a certainty...