Abstract
In order to take a decision in an uncertainty context, it is necessary, from a theoretical point of view, to build a model and specify all the consequences in every possible state of the world. In applied work this method is much too involved.
This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume
This is a preview of subscription content, log in via an institution to check access.
Bibliography
Henry, C. 1974. Investment decisions under uncertainty: The irreversible effect. American Economic Review 64: 1996–2012.
Malinvaud, E. 1969. First order certainty equivalence. Econometrica 37: 706–718.
Simon, H. 1956. Dynamic programming under uncertainty with a quadratic criterion function. Econometrica 24: 74–81.
Theil, H. 1954. Econometric models and welfare maximization. Weltwirtschaftigsches Archiv 72: 60–83.
Theil, H. 1957. A note on certainty equivalence in dynamic planning. Econometrica 25: 346–349.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Copyright information
© 2008 The Author(s)
About this entry
Cite this entry
Freixas, X. (2008). Certainty Equivalence. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_369-2
Download citation
DOI: https://doi.org/10.1057/978-1-349-95121-5_369-2
Received:
Accepted:
Published:
Publisher Name: Palgrave Macmillan, London
Online ISBN: 978-1-349-95121-5
eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences
Publish with us
Chapter history
-
Latest
Certainty Equivalence- Published:
- 20 March 2017
DOI: https://doi.org/10.1057/978-1-349-95121-5_369-2
-
Original
Certainty Equivalent- Published:
- 14 October 2016
DOI: https://doi.org/10.1057/978-1-349-95121-5_369-1