Environmental preservation, uncertainty, and irreversibility

Arrow, K. J., & Fisher, A. C. (1974). Environmental preservation, uncertainty, and irreversibility. Quarterly Journal of Economics, 88(2), 312-319.

Type

Journal article

Intellectual base

Primary research

Year

1974

Link

https://doi.org/10.1057/9780230523210_5matched

Cited from

economics_finance, information_theory

Cited by

2 citations across 2 artifacts.

Each citation links to the sentence it supports in the citing article.

Primes

• Reversibility and Irreversibility
  • Irreversibility (the existing prime) describes a one-way door already passed; Reversibility and Irreversibility describes the choice of whether to pass through the door, and at what cost—a distinction Arrow and Fisher (1974) made operational through quasi-option value, the value of not yet having committed irreversibly when learning is still possible.

    This sourceIntroduces quasi-option value: the value of preserving the option not to commit irreversibly when learning is still possible; foundational distinction between irreversible finality and the choice of whether to commit.

• Reversibility Horizon
  • The reversibility horizon, by contrast, is about the economics of reversal, not the possibility of reversal—a separation Arrow and Fisher (1974) drew explicitly in their analysis of quasi-option value, where preserving the option to reverse has economic worth even when reversal is technically possible.

    This sourceIntroduces quasi-option value: the value of preserving the option not to commit irreversibly when learning is still possible; foundational distinction between irreversible finality and the choice of whether to commit.

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