The behavioral assumptions which economists call “perfect competition,” imply that decentralized decision making under certain conditions leads to a social optimum. This is a central result of classical economic theory. The author discusses the result, and shows that it cannot be expected to hold when uncertainty is introduced. The point is illustrated by a simple example from business finance.

Journal Article Uncertainty and Indifference Curves—A Correction Get access Karl Borch Karl Borch The Norwegian School of Economics and Business Administration Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 40, Issue 1, January 1973, Page 141, https://doi.org/10.2307/2296746 Published: 01 January 1973

(E. Lerdau concurring)