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Abstract
The state-contingent approach to production economics presented by Chambers
and Quiggin provides a new basis for deriving optimality criteria for production
under uncertainty. In the present paper criteria are formally derived for risk-averse
producers. It is not possible to derive useful criteria for strictly risk-averse producers,
but useful criteria for risk-neutral producers are presented for three different types
of input. Based on a formal definition of ‘good’ and ‘bad’ states of nature, the use
of inputs and levels of production of strictly risk-averse producers are compared
to those of risk-neutral producers. Depending on the type of input, risk-averse
producers may use more or less input than risk-neutral producers.