The Allocation of Effort Under Uncertainty: The Case of Risk Averse Behavior

Authors

John Heineke, Santa Clara UniversityFollow
M. K. Block

Document Type

Article

Publication Date

1973

Publisher

University of Chicago Press

Abstract

This paper analyzes the labor supply decision of a single economic agent within the expected utility framework. Two formulations of the problem are considered: pure income uncertainty and wage rate uncertainty. In each case, the effects on the labor supply decision of changes in both expected returns and the dispersion of returns (about a constant mean) are investigated. Arguments concerning the "disincentive effects" of uncertainty are shown not to be unambiguously supported by theory.

Comments

Copyright © 1973. University of Chicago Press. All rights reserved. http://www.press.uchicago.edu/ucp/journals/journal/jpe.html

Recommended Citation

Block, M. K., and John Heineke. "The Allocation of Effort under Uncertainty: The Case of Risk-Averse Behavior." Journal of Political Economy 81.2, Part 1 (1973): 376-85.