Irreversibility, uncertainty, and investment¶
Pindyck, R. S. (1991). Irreversibility, uncertainty, and investment. Journal of Economic Literature, 29(3), 1110-1148.
Cited by¶
1 citation across 1 artifact.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Reversibility and Irreversibility
- Instead of asking "Should we commit to this strategy?" (a question inviting debate about rightness), the prime asks "Should we preserve reversibility, or are the efficiency and credibility gains from irreversible commitment worth the loss of adaptability?"—a tradeoff Pindyck (1991) systematizes in showing how irreversibility shifts the calculus of when to commit versus when to wait.
This sourceSurveys the economics of irreversible investment: shows how irreversibility shifts the calculus of when to commit, explicitly tying the efficiency-credibility gains of irreversible commitment against the option value lost when adaptability is foreclosed.
- Instead of asking "Should we commit to this strategy?" (a question inviting debate about rightness), the prime asks "Should we preserve reversibility, or are the efficiency and credibility gains from irreversible commitment worth the loss of adaptability?"—a tradeoff Pindyck (1991) systematizes in showing how irreversibility shifts the calculus of when to commit versus when to wait.
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