the NLMS model and form (15) that are related to each other by a functional transformation
is cancelled. Eventually, the MS functions yield the same joint analysis model. Therefore, it
is impossible to distinguish the NLMS model and form (15) in the empirical approach. This
also implies that it is possible to provide more than one explanation for a joint analysis model.
For example, regardless of the two types of MS functions, the NLMS model and form (15),
the same joint analysis model arises, and therefore, there are at least two ways of explanation
for Saha (1997) and Abdulkadri, Langemeier and Featherstone (2003)’s models, respectively.
One is shown in table 4 that is derived form the NLMS model, and the other is table 5 that
comes from form (15). The empirical result of Abdulkadri, Langemeier and Featherstone
(2003) is interpreted by the former, while that of Saha (1997) is explained by the latter.
Needless to say, more than one interpretation of a joint analysis model can cause confusion.
These situations take place when the slope of indifference curve, S ( σ, μ ), covers several
types of risk aversion described by Properties 5 and 6 of Proposition 2 and then is
rationalized by more than one MS function in such a way that the coverage of the types of
risk aversion is partial and different. As pointed out by Saha (1997), Cobb-Douglas type’s
slope of indifference curve (14) potentially covers the entire pattern of Properties 5 and 6 but
the NLMS model and form (15) rationalize it only partially and differently (tables 4 and 5).
That causes a multi-interpreting situation. In order to avoid this, we need to examine whether
or not there exists such an MS function that fully rationalizes the types of risk aversion
explained by the flexible slope of indifference curve. This remains for further research.
Conclusion
This study examined the functional specification of MS approach under LS condition. The
contribution of this study can be summarized as three parts. Firstly, the conditions that MS
function has to fully satisfy under LS condition were thoroughly discussed and then the full
26
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