We develop a model of investment, payout, and financing policies in which firms face uncertainty regarding their … between retention and payout, between internal or external financing of investment, and between speculation and hedging. In … the model, investment and payout do not always increase with slack for constrained firms and the choice between internal …

"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"--National Bureau of Economic Research web site …