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The Expected Utility Hypothesis and Demand‐Supply Restrictions
Author(s) -
Pope Rulon D.
Publication year - 1978
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1240246
Subject(s) - economics , expected utility hypothesis , econometrics , context (archaeology) , certainty , class (philosophy) , order (exchange) , econometric model , risk aversion (psychology) , microeconomics , mathematical economics , computer science , mathematics , paleontology , geometry , finance , artificial intelligence , biology
The implications of expected utility theory are examined in order to determine restrictions relevant to reduced form econometric models. In general, Hicksian certainty restrictions do not hold under risk aversion. However, under output price uncertainty, the qualitative nature of the Hicksian restrictions are generally preserved for a commonly used class of polynomial utility functions. These and additional restrictions are considered in the context of a linear model amenable to econometric analysis.