Purpose – The purpose of this paper is to generalize input-hedging models. Design/methodology/approach – Using a general utility function and general probability distributions, the paper extends the Paroush-Wolf and Alghalith theoretical models by including two risky (hedged) inputs....

We implement the theoretical models of input hedging. In doing so, we provide decisive results regarding the marginal impact of the basis risk on the optimal hedge, hedge ratio and hedge position.

In this paper, we treat output as a decision variable. Moreover, we employ a general form of basis risk. Furthermore, we relax the statistical-independence assumption between the spot price and basis risk.

Using a stochastic factor model, we devise a method to estimate the marginal impact of real GDP on the stock market. We apply our approach to the Jamaican financial market.

We show that the increase in price riskiness reduces the optimal output under increasing absolute risk aversion. That is, the marginal impact of the risk on output is independent of the type of absolute risk aversion (decreasing, constant, or increasing).

Using a general framework and a multiple-input technology, we thoroughly investigate the hedging and production decisions under cost uncertainty. In doing so, we show the impact of the cost risk on the optimal output, hedge and hedge ratio. Copyright © 2006 John Wiley & Sons, Ltd.

Without imposing restrictions on the utility function and the probability distributions, we show the impact of multiple uncertainty (and each single uncertainty) and change in risk aversion on each input demand. In so doing, we emphasize the importance of the relationship between the inputs in...

This book introduces new theoretical foundations under uncertainty with applications (Nova Science Publishers Inc., NY, 2007).