Analyzing Consumer’s Behaviour in Risk and Uncertainty Situations

Authors

  • Daniela Elena Marinescu The Bucharest Academy of Economic Studies
  • Dumitru Marin The Bucharest Academy of Economic Studies
  • Ioana Manafi The Bucharest Academy of Economic Studies

Keywords:

compensated demand, risk aversion, Slutsky Equation, uncertainty, uncompensated demand

Abstract

In the paper we will generalize the Slutsky Equation in risk and uncertainty situations using the compensated and uncompensated demand and some local measures of risk aversion. We will obtain a nonlinear optimization problem of maximizing the expected utility; this problem will be solved using the Kuhn-Tucker method. We use the results to analyze the income and substitution effects of price changes on demand in risk and uncertainty conditions.

Author Biographies

Daniela Elena Marinescu, The Bucharest Academy of Economic Studies

Department of Economic Informatics and Cibernetics

Associate Professor Ph.D.

Dumitru Marin, The Bucharest Academy of Economic Studies

Department of Economic Informatics and Cibernetics

Professor Ph.D.

Ioana Manafi, The Bucharest Academy of Economic Studies

Department of Economic Informatics and Cibernetics

Lecturer Ph.D.

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Published

2011-10-15

How to Cite

Marinescu, D. E., Marin, D., & Manafi, I. (2011). Analyzing Consumer’s Behaviour in Risk and Uncertainty Situations. International Journal of Economic Practices and Theories, 1(2), 51-57. Retrieved from http://ijept.eu/index.php/ijept/article/view/14

Issue

Vol. 1 No. 2 (2011)

Section

Articles

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