On the definition of the investment-uncertainty relationship. Journal of Economics and Business

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Abstract

This short paper provides a rigorous definition for the assertion “an increase of uncertainty harms investment” within the real-options framework. In most cases, the effect of uncertainty on investment depends on the time-horizon considered. For typical parameter configurations, more uncertainty favors investment in the short-run.
Original languageEnglish
JournalJournal of Economics and Business
Volume112 (105934)
Publication statusPublished - 2020

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