The choice of a welfare measure under uncertainty

Richard C. Ready

Research output: Contribution to journalArticle

5 Scopus citations

Abstract

Use of option price as a welfare measure when conducting a benefit-cost analysis under uncertainty is appropriate only if the project under consideration will have no impact on the allocation of risk among individuals. Use of the willingness-to-pay locus as a benefit measure is appropriate only if the project will result in an efficient allocation of risk. A more general welfare measure is proposed, maximum agreeable payment, that correctly measures the benefits and costs of any project.

Original languageEnglish (US)
Pages (from-to)896-904
Number of pages9
JournalAmerican Journal of Agricultural Economics
Volume75
Issue number4
DOIs
StatePublished - Nov 1993

All Science Journal Classification (ASJC) codes

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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