Generalized microeconomics /Jiří Hlaváček and Michal Hlaváček ; reviewed by Jan Pelikán, Milan Žák ; edited by Jan Havlíček.
- [Prague, Czech Republic] : Karolinum Press, (c)2013.
- 1 online resource (207 pages) : illustrations
Includes bibliographies and index.
Foreword; 1. The generalized principle of economic rationality; 1.1 Alternatives to the homo economicus paradigm; 1.2 Minimization of the subjective probability of economic extinction; 1.3 Pareto distribution of the probability of survival; 1.3.1 First-order Pareto probability distribution; 1.3.2 Second-order Pareto probability distribution; 1.3.3 General Pareto probability distribution; 2. Modelling risk and hedging against it; 2.1 Probability of survival for income as a random variable; 2.2 Formulation of the Leningrad casino problem; 2.3 Model of the St. Petersburg paradox. 3. Moral hazard and adverse selection in the context of maximization of the probability of economic survival3.1 Principal-agent model; 3.1.1 Adverse selection; 3.1.2 Moral hazard; 3.2 Application of generalized microeconomics: Maximization of the probability of economic survival; 3.2.1 Threat to the agent due to extinction of the principal; 3.2.2 Adverse selection in the context of probability of survival; 3.2.3 Moral hazard in the context of probability of survival; 3.2.4 Comparison of the standard homo economicus with a survival-probability-maximizing agent. 4. The demand function in the insurance market: Comparison of maximization of the Pareto probability of survival with the von Neumann-Morgenstern EU theory and Kahneman-Tversky prospect theory4.1 Insurance in the model of maximization of an agent's Pareto probability of (economic) survival; 4.2 Insurance demand in the von Neumann-Morgenstern model of maximization of the expected utility of income (EU theory); 4.3 Insurance demand in the Kahneman-Tversky model (prospect theory, PT); 4.4 C omparison of the demand functions of models A, B, and C (from the previous three sections). 5. Modelling non-profit institutions: The university supply function5.1 Economic rationality in the non-profit sector; 5.2 An optimization model of university behaviour; 5.3 University supply function; 6. Behaviour of a firm ina centrally planned economy-the homo se assecurans model; 6.1 Set of feasible production situations in a centrally planned economy; 6.2 The index planning method and the criterion of a producer in a centrally planned economy; 6.3 Maximization of the absolute reserve. 6.4 Maximization of the relative reserve (id est maximization of the pareto probability of survival in a CPE)7. Model of an economy with widespread corporate insolvency; 7.1 The problem of secondary insolvency; 7.2 Models of decision-making in an economy with widespread secondary insolvency; 7.2.1 Model A: minimax strategy; 7.2.2 Model B: minimum extinction risk strategy; 8. The producer's optimum under increasing returns to scale; 8.1 Model A: uniform distributions of the probability of extinction w.r.t. price.
The generalization of microeconomics (maximization of probability of agent's survival) enabled model description of economic rationality even in the fields, where profit maximization is not suitable, like redistribution, non-profit sector, both positive and negative externalities, centrally planned economy et cetera When profit criterion is adequate, the general criterion is identical with profit maximization.