On the Valuation of Uncertainty in Welfare Analysis

Posted: 24 Apr 2002

See all articles by Jean-Paul Chavas

Jean-Paul Chavas

University of Wisconsin

Daniel Mullarkey

USDA - Natural Resources Conservation Service

Abstract

This article develops a general model of private and public choice under temporal uncertainty. The model incorporates the effects of risk preferences and the prospect of future learning into both the individual and aggregate valuations of public projects. The analysis provides new insights on individual valuation, its implications for benefit-cost analysis and the characterization of Pareto-efficiency under uncertainty. It also resolves some of the confusion in the option value and quasi-option value literature.

Suggested Citation

Chavas, Jean-Paul and Mullarkey, Daniel, On the Valuation of Uncertainty in Welfare Analysis. American Journal of Agricultural Economics, Vol. 84, pp. 23-38, 2002. Available at SSRN: https://ssrn.com/abstract=308788

Jean-Paul Chavas (Contact Author)

University of Wisconsin ( email )

Taylor Hall
Madison, WI 53706
United States
(608) 261-1944 (Phone)
(608) 262-4376 (Fax)

Daniel Mullarkey

USDA - Natural Resources Conservation Service ( email )

5601 Sunnyside Ave
George Washington Carver Center
Beltsville, MD 20705
United States
301-504-2344 (Phone)

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