Investment under Uncertainty¶
Dixit, A. K., & Pindyck, R. S. (1994). Investment under Uncertainty. Princeton University Press.
Cited by¶
10 citations across 10 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Collingridge Dilemma
- From real-options finance into strategic planning, the machinery for pricing optionality is the formal version of curve-bending.
This sourceFoundational real-options analysis pricing the value of preserving the right to revise an irreversible commitment.
- From real-options finance into strategic planning, the machinery for pricing optionality is the formal version of curve-bending.
- Evidence-Latency Window
- A decision clock. An action must be committed by a deadline T, past which committing is prohibitive or impossible: a treatment deadline, a containment window, a takeoff slot, a shelf-life limit, a settlement date.
This sourceDevelops the real-options theory of irreversible commitment under uncertainty: a decision held open has option value, so the timing of an irreversible commitment relative to the arrival of information is the load-bearing variable — the decision-clock side of the two-clock geometry.
- A decision clock. An action must be committed by a deadline T, past which committing is prohibitive or impossible: a treatment deadline, a containment window, a takeoff slot, a shelf-life limit, a settlement date.
- Latent Realizable Capacity
- In psychology it is traits and abilities realized on tasks, latent attitudes surfacing under priming; in economics it is option value, contingent liabilities, and credit lines as latent borrowing power.
This sourceFoundational treatment of option value and real options — latent capacities to act under future contingencies valued as standing dispositions.
- In psychology it is traits and abilities realized on tasks, latent attitudes surfacing under priming; in economics it is option value, contingent liabilities, and credit lines as latent borrowing power.
- Lazy Evaluation
- In decision-making and strategy it is the deliberate deferral of reversible-cost decisions until the information needed to make them is in hand, and real-options thinking that preserves the right (not obligation) to act later.
This sourceDevelops real-options reasoning that preserves the right (not obligation) to act later and defers reversible-cost decisions until information arrives.
- In decision-making and strategy it is the deliberate deferral of reversible-cost decisions until the information needed to make them is in hand, and real-options thinking that preserves the right (not obligation) to act later.
- Optimal Stopping Rule
- Drug discovery uses early go/no-go gates; military operations use commit-points; investment uses exit-rule discipline.
This sourceDevelops option-value/optimal-stopping discipline for irreversible investment, including exit and waiting rules under uncertainty.
- Drug discovery uses early go/no-go gates; military operations use commit-points; investment uses exit-rule discipline.
- Optionality
- It is a structured deferral, not a failure of choice, as Dixit and Pindyck (1994) emphasize in their canonical treatment of investment under uncertainty.
This sourceCanonical treatment of irreversible investment as a problem of optimal exercise of real options; rigorously distinguishes priced, intentional deferral from indecision and identifies the value of waiting for information.
- It is a structured deferral, not a failure of choice, as Dixit and Pindyck (1994) emphasize in their canonical treatment of investment under uncertainty.
- Reversibility and Irreversibility
- It separates actions into a spectrum from fully reversible (low restoration cost, high option value) to effectively irreversible (prohibitive restoration cost, options closed), as Dixit and Pindyck (1994) develop in their analysis of investment under uncertainty.
This sourceCanonical treatment of irreversible investment as a problem of optimal exercise of real options; rigorously distinguishes priced, intentional deferral from indecision and identifies the value of waiting for information.
- It separates actions into a spectrum from fully reversible (low restoration cost, high option value) to effectively irreversible (prohibitive restoration cost, options closed), as Dixit and Pindyck (1994) develop in their analysis of investment under uncertainty.
- Reversibility Horizon
- A temporal threshold beyond which the economic or practical cost of reversal exceeds the cost of committing forward, transforming a nominally reversible decision into an effectively irreversible one, as Dixit and Pindyck (1994) develop in their canonical treatment of investment under uncertainty.
This sourceCanonical treatment of irreversible investment as a problem of optimal exercise of real options; rigorously distinguishes priced, intentional deferral from indecision and identifies the value of waiting for information.
- A temporal threshold beyond which the economic or practical cost of reversal exceeds the cost of committing forward, transforming a nominally reversible decision into an effectively irreversible one, as Dixit and Pindyck (1994) develop in their canonical treatment of investment under uncertainty.
- Stage Gate Process
- And real- option valuation ports from finance into staged R&D budgeting, connecting formal valuation theory to organisational practice.
This sourceReal-options valuation, porting from finance into staged R&D budgeting where staged commitment is a sequence of options.
- And real- option valuation ports from finance into staged R&D budgeting, connecting formal valuation theory to organisational practice.
Mechanisms¶
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