A framework for empirical applications of production theory without expected utility

The Effects of Foreign Price Uncertainty on Australian Production and Trade*

“…As the convexity hypothesis is not rejected by the data, we conclude that the model estimate is, indeed, consistent with expected utility maximisation theory. A similar conclusion is reached in Satyanarayan (1999) and Appelbaum (2006).…”

“…First, unlike Chavas and Holt (1996), for example, we do not specify functional forms for either the utility function or the production technology. Rather, we follow the approach outlined in Appelbaum (1993), Appelbaum and Ullah (1997), Satyanarayan (1999) and Appelbaum (2006) 3 and apply a dual approach to derive supply and demand functions. Specifically, we specify a quadratic approximation to the indirect utility function to obtain a set of empirically estimable supply/demand functions expressed in terms of the first two moments of the price distribution (and other exogenous variables).…”

Can legality verification rescue global forest governance?

“…However, it is possible to estimate the relative change to price relative to consumption based on previous studies of price elasticity for the relevant products. For example, using US furniture data Appelbaum (2006) found inelastic material substitution, suggesting that wood materials in finished products are not easily substituted and thus restrictions in supply will lead to higher prices. While this is only a single study, it reflects a broader truth about price behavior following restrictions in the supply of wood available due to the removal of low price illegal timber from the market.…”

A new methodology for studying the equity premium

“…See also Machina (1984), where it is shown that, in the case of expected utility (in the context of a static model), convexity and continuity in the distribution completely characterize the indirect utility functional, so that any functional with these properties is the indirect utility functional for some preferences. 13 See Appelbaum (1997Appelbaum ( , 2006 for a discussion and proof of continuity, convexity and monotonicity. If we do not have expected utility, H (w t , R f t , m t ) may be either convex, or concave in the moments.…”

“…See for example, Kocherlakota and Pistaferri (2007) and Basu et al (2008). 6 The application of duality and the use of the indirect utility function are based on Appelbaum (1997Appelbaum ( , 2006 where it is developed in a static production decisions framework. of the IUF in mean/standard deviation space.…”