Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/155304
Authors: 
Broll, Udo
Welzel, Peter
Wong, Kit Pong
Year of Publication: 
2017
Series/Report no.: 
CEPIE Working Paper 03/17
Abstract: 
We examine the economic behavior of the regret-averse firm under price uncertainty. We show that the global and marginal effects of price uncertainty on production are both positive (negative) when regret aversion prevails if the random output price is positively (negatively) skewed. In this case, high (low) output prices are much more likely to be seen than low (high) output prices. To minimize regret, the firm is induced to raise (lower) its output optimal level. The skewness of the price distribution as such plays a pivotal role in determining the regret-averse firm's production decision.
Subjects: 
Production
Regret theory
Skewness
Uncertainty
JEL: 
D21
D24
D81
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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