probability of disaster leads to a collapse of investment and a recession, an increase in risk spreads, and a decrease in the … of business cycle dynamics, especially sharp downturns in investment and output such as 2008-IV …

In this paper we study "investment tournaments," a class of decision problems that involve gradual allocation of … investment among several alternatives whose values are subject to exogenous shocks. The decision-maker's payoff is determined by … an early stage of the tournament in a bid to capture a larger share of employer's investment, such as mentoring …

The theoretical relationship between investment and uncertainty is ambiguous. This paper briefly surveys the insights … that theory has to offer and then runs a series of simple tests aimed at evaluating the empirical significance of various … theoretical effects. Our results from a panel of U.S. manufacturing firms indicate a negative effect of uncertainty on investment …

Despite widespread application of real options theory in the literature, the extent to which firms actually delay … future oil price volatility derived from the NYMEX futures options market. Using a dynamic model of firms' investment problem … magnitude consistent with the optimal response prescribed by theory …

This paper develops a theory of dynamic pessimism and its impact on asset prices. Notions of time-varying pessimism …