Investment under Uncertainty

Investment under Uncertainty
Author: Robert K. Dixit
Publisher: Princeton University Press
Total Pages: 484
Release: 2012-07-14
Genre: Business & Economics
ISBN: 1400830176

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How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made. In so doing, they answer important questions about investment decisions and the behavior of investment spending. This new approach to investment recognizes the option value of waiting for better (but never complete) information. It exploits an analogy with the theory of options in financial markets, which permits a much richer dynamic framework than was possible with the traditional theory of investment. The authors present the new theory in a clear and systematic way, and consolidate, synthesize, and extend the various strands of research that have come out of the theory. Their book shows the importance of the theory for understanding investment behavior of firms; develops the implications of this theory for industry dynamics and for government policy concerning investment; and shows how the theory can be applied to specific industries and to a wide variety of business problems.

Investment Under Uncertainty

Investment Under Uncertainty
Author: Robert K. Dixit
Publisher:
Total Pages: 483
Release: 2012
Genre:
ISBN:

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How should firms decide whether and when to invest in new capital equipment, additions to their workforce, or the development of new products? Why have traditional economic models of investment failed to explain the behavior of investment spending in the United States and other countries? In this book, Avinash Dixit and Robert Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are mad.

Real Options and Investment Under Uncertainty

Real Options and Investment Under Uncertainty
Author: Eduardo S. Schwartz
Publisher: MIT Press
Total Pages: 890
Release: 2004
Genre: Business & Economics
ISBN: 9780262693189

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The study of investment under uncertainty was stagnant for several decades until developments in real options revitalized the field. The topics covered in this book include the reasons behind the under-investment programme.

Stochastic Dominance

Stochastic Dominance
Author: Haim Levy
Publisher: Springer Science & Business Media
Total Pages: 439
Release: 2006-08-25
Genre: Business & Economics
ISBN: 0387293116

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This book is devoted to investment decision-making under uncertainty. The book covers three basic approaches to this process: the stochastic dominance approach; the mean-variance approach; and the non-expected utility approach, focusing on prospect theory and its modified version, cumulative prospect theory. Each approach is discussed and compared. In addition, this volume examines cases in which stochastic dominance rules coincide with the mean-variance rule and considers how contradictions between these two approaches may occur.

Risk, Uncertainty and Profit

Risk, Uncertainty and Profit
Author: Frank H. Knight
Publisher: Courier Corporation
Total Pages: 450
Release: 2012-03-09
Genre: Business & Economics
ISBN: 0486147932

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DIVThis enduring economics text provided the theoretical basis of the entrepreneurial American economy during the post-industrial era. A revolutionary work, it taught the world how to systematically distinguish between risk and uncertainty. /div

Investment in Electricity Generation and Transmission

Investment in Electricity Generation and Transmission
Author: Antonio J. Conejo
Publisher: Springer
Total Pages: 389
Release: 2016-06-10
Genre: Business & Economics
ISBN: 3319295012

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This book provides an in-depth analysis of investment problems pertaining to electric energy infrastructure, including both generation and transmission facilities. The analysis encompasses decision-making tools for expansion planning, reinforcement, and the selection and timing of investment options. In this regard, the book provides an up-to-date description of analytical tools to address challenging investment questions such as: How can we expand and/or reinforce our aging electricity transmission infrastructure? How can we expand the transmission network of a given region to integrate significant amounts of renewable generation? How can we expand generation facilities to achieve a low-carbon electricity production system? How can we expand the generation system while ensuring appropriate levels of flexibility to accommodate both demand-related and production-related uncertainties? How can we choose among alternative production facilities? What is the right time to invest in a given production or transmission facility? Written in a tutorial style and modular format, the book includes a wealth of illustrative examples to facilitate comprehension. It is intended for advanced undergraduate and graduate students in the fields of electric energy systems, operations research, management science, and economics. Practitioners in the electric energy sector will also benefit from the concepts and techniques presented here.

Investment under Uncertainty, Coalition Spillovers and Market Evolution in a Game Theoretic Perspective

Investment under Uncertainty, Coalition Spillovers and Market Evolution in a Game Theoretic Perspective
Author: J.H.H Thijssen
Publisher: Springer Science & Business Media
Total Pages: 255
Release: 2006-04-11
Genre: Business & Economics
ISBN: 1402079443

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Two crucial aspects of economic reality are uncertainty and dynamics. In this book, new models and techniques are developed to analyse economic dynamics in an uncertain environment. In the first part, investment decisions of firms are analysed in a framework where imperfect information regarding the investment's profitability is obtained randomly over time. In the second part, a new class of cooperative games, spillover games, is developed and applied to a particular investment problem under uncertainty: mergers. In the third part, the effect of bounded rationality on market evolution is analysed for oligopolistic competition and incomplete financial markets.

Investment Under Uncertainty

Investment Under Uncertainty
Author: Herminio Alonso Blanco Mendoza
Publisher:
Total Pages: 136
Release: 1978
Genre: Investments
ISBN:

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Irreversibility, Uncertainty, and Investment

Irreversibility, Uncertainty, and Investment
Author: Robert S. Pindyck
Publisher: World Bank Publications
Total Pages: 58
Release: 1989
Genre: Capital investments
ISBN:

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Irreversible investment is especially sensitive to such risk factors as volatile exchange rates and uncertainty about tariff structures and future cash flows. If the goal of macroeconomic policy is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates.

Pandora's Risk

Pandora's Risk
Author: Kent Osband
Publisher: Columbia University Press
Total Pages: 306
Release: 2011
Genre: Business & Economics
ISBN: 0231151721

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Author of the acclaimed work Iceberg Risk: An Adventure in Portfolio Theory, Kent Osband argues that uncertainty is central rather than marginal to finance. Markets don't trade mainly on changes in risk. They trade on changes in beliefs about risk, and in the process, markets unite, stretch, and occasionally defy beliefs. Recognizing this truth would make a world of difference in investing. Belittling uncertainty has created a rift between financial theory and practice and within finance theory itself, misguiding regulation and stoking huge financial imbalances. Sparking a revolution in the mindset of the investment professional, Osband recasts the market as a learning machine rather than a knowledge machine. The market continually errs, corrects itself, and makes new errors. Respecting that process, without idolizing it, will promote wiser investment, trading, and regulation. With uncertainty embedded at its core, Osband's rational approach points to a finance theory worthy of twenty-first-century investing.