Irreversibility, Uncertainty and Investment in the Presence of Technological Progress

Foreign Investment as Main Factor for Successful Funds and Its Effect on Trade Balance Strategic Technology Adoption under Technological Uncertainty

Interval network data envelopment analysis model for classification of investment companies in the presence of uncertain data

The main purpose of this paper is to propose an approach for performance measurement, classification and ranking the investment companies (ICs) by considering internal structure and uncertainty. In order to reach this goal, the interval network data envelopment analysis (INDEA) models are extended. This model is capable to model two-stage efficiency with intermediate measures i...

Technology Adoption under Relative Factor Price Uncertainty: The Putty-Clay Investment Model

A plant has more flexibility in choosing among different technologies before undertaking an investment than after installing a specific machine. This paper argues that the irreversibility of factor intensity choice may play an important role in explaining the dynamics of investment in the presence of relative factor price uncertainty. A higher degree of irreversibility in the choice of factor i...

IMF Staff Papers, Vol. 53, No. 3, 2006: To Buy or Not to Buy? Uncertainty, Irreversibility, and Heterogeneous Investment Dynamics in Italian Company Data by Stephen R. Bond and Domenico Lombardi

This study tests for the presence of real options effects induced by uncertainty and (partial) irreversibility on fixed capital investment using Italian company data. Our approach recognizes that firm-level investment spending may, itself, be aggregated over multiple investment decisions in separate types of capital goods and emphasizes effects of uncertainty on short-run investment dynamics. U...

Incorporating Risk Preferences into Real Options Models

This paper develops a framework to link the expected utility analysis to real options models in order to capture the joint effects of risk aversion and irreversibility associated with real investments. It aims at modifying the theory of investment under uncertainty by incorporating decision makers’ risk preferences and allows explicitly analyzing the impacts of risk aversion, uncertainty and ir...