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We apply utility indifference pricing to solve a contingent claim problem, valuing a connected pair of gas fields where the underlying process is not standard Geometric Brownian motion and the assumption of complete markets is not fulfilled. First, empirical data are often characterized by...
Persistent link: https://www.econbiz.de/10010465169
This paper builds a consumer search model where the cost of going back to stores already searched is explicitly taken into account. We show that the optimal search rule under costly recall is very different from the optimal search rule under perfect recall. Under costly recall, the optimal...
Persistent link: https://www.econbiz.de/10011373816
We study a two-stage R&D project with an abandonment option. Two types of uncertainty influence the decision to start R …&D. Demand uncertainty is modelled as a lottery between a proportional increase and decrease in demand. Technical uncertainty is … modelled as a lottery between a decrease and increase in the cost to continue R&D. We relate differences in uncertainty to …
Persistent link: https://www.econbiz.de/10011378299
their risk aversion parameter invest less in risky assets than wealthy investors with identical risk aversion uncertainty. …
Persistent link: https://www.econbiz.de/10011382430
We investigate the major choice of college graduates where we make choice dependent on expected initial wages and expected wage growth per major. We build a model that allows us to estimate these factors semiparametrically and that corrects for selection bias. We estimate the model on the...
Persistent link: https://www.econbiz.de/10012228687
This paper demonstrates that well-established biases in decision making under uncertainty can generate poverty traps. A …
Persistent link: https://www.econbiz.de/10015062969
Persistent link: https://www.econbiz.de/10011337990
In this paper we present two general results on the existence of a discrete zero point of a function from the n-dimensional integer lattice Zn to the n-dimensional Euclidean space Rn. Under two different boundary conditions, we give a constructive proof using a combinatorial argument based on a...
Persistent link: https://www.econbiz.de/10011346458
Dams are essential for water storage and hydropower generation, but change river flow patterns and endanger local environments. Dam projects may further exacerbate already existing problems in trans-boundary rivers. We consider three scenarios of institutional factors: (1) each country pursues...
Persistent link: https://www.econbiz.de/10011556226
In criminal cases the task of the judge is to transform the uncertainty about the facts into the certainty of the …
Persistent link: https://www.econbiz.de/10011377092