| Abstract: | The theoretical difficulties of the expected value-variance (E-V) criterion are well known. A number of recent research efforts test the criterion's effectiveness in a publicly traded securities environment. In contrast, this research explores the performance of the E-V criterion using firm-specific, nontradeable investments such as those made by small firms. The empirical example in the study is a small family proprietorship with limited investment opportunities in agricultural production activities. Results indicate the E-V criterion performs well in selecting nontradeable investments that maximize expected utility. These results are consistent with results of earlier research dealing with tradeable securities. |
