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Comparative Statics for a Decision Model with Two Choice Variables and Two Random Variables: A Mean–Standard Deviation Approach
Author(s) -
Choi Gyemyung,
Kim Iltae
Publication year - 2001
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/1467-9957.00253
Subject(s) - standard deviation , comparative statics , mathematics , covariance and correlation , covariance , variance (accounting) , random variable , econometrics , statistics , statics , absolute deviation , sum of normally distributed random variables , economics , multivariate random variable , physics , accounting , classical mechanics , macroeconomics
The decision model with two choice variables and two random variables, an extension of Feder, or Just and Pope, is examined here. Under the mean–standard deviation framework we derive the comparative statics results concerning the effects of a change in the mean, variance and covariance of the random parameters. Some restrictions on the random variables and on the decision model are considered for unambiguous comparative statics predictions.