Understanding the Behaviour of Communities Towards Risk Management and its Impact on Productivity

In this paper we try to study the impact of risk mitigating behavior of communities and its Households on the overall productivity of the economic system. We have tried to look at the phenomenon in terms of a model having its objective function as maximizing productivity in the presence of the constraint of the risk of doing business outside the community. We see that if individuals in a community perceive the risk of economic transactions to grow exponentially as they move away from the locus of the community socially as well as physically, there is a limit to which they will travel the social and/or the physical distance.