FLEXIBILITY, UNCERTAINTY, AND ECONOMIC THEORY

FLEXIBILITY, UNCERTAINTY, AND ECONOMIC THEORY 'rO\YAHD A 1)IJFINITION OF FLEXIBILITT. Many decision problcms are charac terizecl by tlic following structurc: a) The payoff to the dccision maker is a function of a sequciice of actions takcn by hiin, at times t, , t, , ... , t, , ... , a d a sequence of states of thc world bcyond his control. b) At any point in the decision sequence, the decision maker has less than pcrfect infornration about what the future sequence of states of thc world will be. - 43 c) Although beforc. timc f, the dccisioii inakor is uncertain as to what the world will be likc at tiiiic I , , he is‘less uncertain at times closer to t, than he was at times farther away. The decision maker acquires additional information-he learns about future states of the world-as time goes by. Although flexibility could be discussed in much more general terms, we shall investigate it liere for two-stage decision problems. The payoff to the decision maker, that is to say, can be written (1.1) x = TF(al, a , , w ), where a, is the action taken at timc i t , a, is the action taken http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Metroeconomica Wiley

FLEXIBILITY, UNCERTAINTY, AND ECONOMIC THEORY

Metroeconomica, Volume 14 (1‐2‐3) – Feb 1, 1962

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Publisher
Wiley
Copyright
Copyright © 1962 Wiley Subscription Services, Inc., A Wiley Company
ISSN
0026-1386
eISSN
1467-999X
DOI
10.1111/j.1467-999X.1962.tb00293.x
Publisher site
See Article on Publisher Site

Abstract

'rO\YAHD A 1)IJFINITION OF FLEXIBILITT. Many decision problcms are charac terizecl by tlic following structurc: a) The payoff to the dccision maker is a function of a sequciice of actions takcn by hiin, at times t, , t, , ... , t, , ... , a d a sequence of states of thc world bcyond his control. b) At any point in the decision sequence, the decision maker has less than pcrfect infornration about what the future sequence of states of thc world will be. - 43 c) Although beforc. timc f, the dccisioii inakor is uncertain as to what the world will be likc at tiiiic I , , he is‘less uncertain at times closer to t, than he was at times farther away. The decision maker acquires additional information-he learns about future states of the world-as time goes by. Although flexibility could be discussed in much more general terms, we shall investigate it liere for two-stage decision problems. The payoff to the decision maker, that is to say, can be written (1.1) x = TF(al, a , , w ), where a, is the action taken at timc i t , a, is the action taken

Journal

MetroeconomicaWiley

Published: Feb 1, 1962

References

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