Ambiguity and the incentive to export

Arbeitspapier

This paper examines the optimal production and export decisions of an international firm facing exchange rate uncertainty when the firm's preferences exhibit smooth ambiguity aversion. Ambiguity is modeled by a second-order probability distribution that captures the firm's uncertainty about which of the subjective beliefs govern the exchange rate risk. Ambiguity preferences are modeled by the (second-order) expectation of a concave transformation of the ( first-order) expected utility of profit conditional on each plausible subjective distribution of the exchange rate risk. Within this framework, we show that ambiguity has no impact on the firm's propensity to export to a foreign country. Ambiguity and ambiguity aversion, however, are shown to have adverse effect on the firm's incentive to export to the foreign country.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Dresden Discussion Paper Series in Economics ; No. 01/14

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Firm Behavior: Theory ; Criteria for Decision-Making under Risk and Uncertainty ; Foreign Exchange
• Thema: Ambiguity ; Ambiguity aversion ; Exports ; Production

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Broll, Udo ; Wong, Kit Pong
• Ereignis: Veröffentlichung
• (wer): Technische Universität Dresden, Fakultät Wirtschaftswissenschaften
• (wo): Dresden
• (wann): 2014

Weitere Informationen

• Handle: http://hdl.handle.net/10419/144880
• URN: urn:nbn:de:bsz:14-qucosa-150499
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ