Browsing Working Papers by Author "Sødal, Sigbjørn"
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A markup interpretation of optimal rules for irreversible investment
Dixit, Avinash K.; Pindyck, Robert S.; Sødal, Sigbjørn (MIT Center for Energy and Environmental Policy Research, 1997)We re-examine the basic investment problem of deciding when to incur a sunk cost to obtain a stochastically fluctuating benefit. The optimal investment rule satisfies a trade-off between a larger versus a later net benefit; ...