Abstract
A large body of literature has accumulated which examines how the optimal solution of an agent maximizing the expectation of a real-valued function, depending on a random parameterp and the agent's behaviorx, reacts to perturbations in the first and second moments ofp. Here, by an approximation valid for small uncertainty, we allow many agents and consider their behavior in a Cournot-Nash equilibrium. We also allowp to depend on the behaviors of the participating agents. We apply the analysis to two models, one of a Cournot oligopoly, the other of a cooperative of individuals where there is uncertainty in the return to communal work.
Similar content being viewed by others
References
Rothschild, M., andStiglitz, J. E.,Increasing Risk, I: A Definition, Journal of Economic Theory, Vol. 2, pp. 225–243, 1970.
Rothschild, M., andStiglitz, J. E.,Increasing Risk, II: Its Economic Consequences, Journal of Economic Theory, Vol. 3, pp. 66–84, 1971.
Sandmo, A.,On the Theory of the Competitive Firm under Price Uncertainty, American Economic Review, Vol. 61, pp. 65–73, 1971.
Ishii, Y.,On the Theory of the Competitive Firm under Price Uncertainty: Note, American Economic Review, Vol. 67, pp. 768–769, 1977.
Ireland, N. J., andLaw, P. J.,The Economics of Labor-Managed Enterprises, Croom Helm, London, England, 1982.
Ireland, N. J.,The Analogy between Parameter Uncertainty and Parameter Change, Economics Letters, Vol. 6, pp. 301–308, 1980.
Bonin, J. P.,Work Incentives and Uncertainty on a Collective Farm, Journal of Comparative Economics, Vol. 1, pp. 77–97, 1977.
Ireland, N. J., andLaw, P. J.,Private Plot Restrictions in a Collective Farm Model, Canadian Journal of Economics, Vol. 13, pp. 475–485, 1980.
Oi, W. Y., andClayton, E. S.,A Peasant's View of a Soviet Collective Farm, American Economic Review, Vol. 58, pp. 37–59, 1968.
Sertel, M. R.,Workers and Incentives, North-Holland Publishing Company, Amsterdam, Holland, 1982.
Ireland, N. J., andLaw, P. J.,Efficiency, Incentives, and Individual Labor Supply in the Labor-Managed Firm, Journal of Comparative Economics, Vol. 5, pp. 1–23, 1981.
Author information
Authors and Affiliations
Additional information
Communicated by G. Leitmann
The second and third authors are grateful to the British Council (Academic Links and Interchange Scheme) for financial support.
Rights and permissions
About this article
Cite this article
Aaftink, J., Ireland, N. & Sertel, M. On Cournot-Nash equilibria with exogenous uncertainty. J Optim Theory Appl 49, 349–365 (1986). https://doi.org/10.1007/BF00941066
Issue Date:
DOI: https://doi.org/10.1007/BF00941066