Dec 10, 2019
Investment Under Uncertainty
Posted by Avinash K. Dixit Robert S. Pindyck

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 expositionHow 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 these and other 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 The book shows the importance of the theory for understanding the investment behavior of firms It develops the implications of this theory for industry dynamics and for government policy concerning investment It also shows how the theory can be applied to specific industries and to a wide variety of business problems.

  • Title: Investment Under Uncertainty
  • Author: Avinash K. Dixit Robert S. Pindyck
  • ISBN: 9780691034102
  • Page: 348
  • Format: Hardcover
  • Investment Under Uncertainty 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

    Thomas C

    Although theoretical, I recommend this to every investor wishing to understand corporate and private investment decision making better.Too often only the expected value of business decisions is teached in introductory business courses (IRR, payback time, NPV) and the optionality from waiting under uncertainty is not even covered. Rather, it is teached that companies cannot invest in all positive NPV projects, but merely invest in the highest NPV projects available under scarcity of capital.Readi [...]



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      Posted by:Avinash K. Dixit Robert S. Pindyck
      Published :2019-03-09T15:27:58+00:00