Decision making under risk with continuous states of nature

Many real-world decision making situation are associated with uncertainty regarding future state of the World. Traditionally, in such situation different (and discrete) scenarios – future states of nature – are considered. This domain of decision making is denoted as decision making under risk. However, limitation to some set of discrete scenarios is somewhat unnatural as future reality might not choose one of considered scenarios, but some other scenario or a scenario in between. The aim of this paper is to propose a more natural approach with continuum states of nature, where all scenarios expressed by their probability density function from some reasonable interval are taken into consideration. The approach is illustrated by a numerical example and is compared with the corresponding decision making under risk with discrete states of nature

A Comparison of GDP growth of European countries during 2008-2012 period from regional and other perspectives

The aim of the article is to compare total real GDP growth of European countries from the 3rd quarter of 2008 to the 3rd quarter of 2012, that is the period from the start of the Great recession in European Union to the present day. This period is characterized by a predominant economic stagnation or an economic recession, which occurred in the majority of examined European countries. Countries were divided into groups based on the following grounds: whether they are geographically close the economic center (Germany) or periphery, whether they are in Eurozone or not, whether they are (new) EU members or not, etc. The main findings from the comparisons are as follows: 1. European countries close to the economic center (Germany and its neighbours) experienced positive economic growth during examined period on average, while countries from European periphery experienced negative economic growth on average during the same period. This difference was found statistically significant at α = 0.01 level. 2. Differences between Eurozone and non-Eurozone and differences between old and new EU members were found statistically insignificant. 3. Among European regions with the most negative real total GDP growth were countries from Baltics, Balkans, Southern Europe (Italy, Portugal) and Iceland. The most successfull countries with the most positive real total GDP growth were countries of central Europe (Poland, Slovakia, Germany, Switzerland, Austria) and Northern Europe (Sweden and Norway)

Some Notes on Inconsistence and Indecisiveness in the Analytic Hierarchy Process

The aim of the article is to introduce a mathematical concept of indecisiveness into the analytic hierarchy process (AHP) framework. Indecisiveness can be useful in two ways: first, decision makers with high indecisiveness (higher than a given threshold value) can be excluded from a decision making process in its early stages as low-competent and replaced by other, more competent DMs; second, indecisiveness along with consistency index C.I. can be used for the calculation of (aposteriori) DMs’ weights without any additional information about DMs’ age, formal knowledge, social status, etc. The proposed approach is demonstrated on examples

The Flow Model of Exports: An Introduction

The aim of the paper is to propose a new simple frictionless model of international trade shares as an alternative to standard gravity models. In the proposed model (total) shares of export from a given country depend only on a gross domestic product and a distance of importing countries. The model is examined by a linear regression with corrected heteroscedasticity for the latest export data from Germany and the Czech Republic. Results show that the model is very successful in explaining export shares with coefficients of determinacy 0.75 and 0.98 respectively

Aggregate demand function is not monotonic: the Loss of confidence effect

The aim of this article is to show that an aggregate demand function (curve) might not be monotonically decreasing as assumed in economic theory. When a price of a good decreases to some point, the amount demanded stops increasing due to the so called loss of confidence effect: a price too low causes consumers’ distrust. The existence of this effect was examined via questionnaire research among a small sample of respondents. The main result of this study is that the loss of confidence effect was found indeed, and applied to some 40% of respondents. However, a broader and more sophisticated research on the topic is needed. Results of this study have an impact on microeconomics theory as well on sellers’ behavior, as a lower price might not sell more than a higher price

Some Notes on Inconsistence and Indecisiveness in the Analytic Hierarchy Process

The aim of the article is to introduce a mathematical concept of indecisiveness into the analytic hierarchy process (AHP) framework. Indecisiveness can be useful in two ways: first, decision makers with high indecisiveness (higher than a given threshold value) can be excluded from a decision making process in its early stages as low-competent and replaced by other, more competent DMs; second, indecisiveness along with consistency index C.I. can be used for the calculation of (aposteriori) DMs’ weights without any additional information about DMs’ age, formal knowledge, social status, etc. The proposed approach is demonstrated on examples

Aggregate demand function is not monotonic: the Loss of confidence effect

The aim of this article is to show that an aggregate demand function (curve) might not be monotonically decreasing as assumed in economic theory. When a price of a good decreases to some point, the amount demanded stops increasing due to the so called loss of confidence effect: a price too low causes consumers’ distrust. The existence of this effect was examined via questionnaire research among a small sample of respondents. The main result of this study is that the loss of confidence effect was found indeed, and applied to some 40% of respondents. However, a broader and more sophisticated research on the topic is needed. Results of this study have an impact on microeconomics theory as well on sellers’ behavior, as a lower price might not sell more than a higher price