Investment Under Economic and Implementation Uncertainty

R&D Management, vol. 31, no. 2, pp. 127-135, 2001

23 Pages Posted: 11 Dec 2013

See all articles by Andrianos E. Tsekrekos

Andrianos E. Tsekrekos

Athens University of Economics and Business - Department of Accounting and Finance

Date Written: February 1, 2000

Abstract

Some investment decisions are exposed to uncertainty over their implementation phase apart from the underlying economic uncertainty. We provide a general way of introducing implementation uncertainty, which includes prior research as a special case. The generality of our treatment stems from the fact that implementation uncertainty is allowed to affect both the level and the timing of project profitability. In a case explicitly addressed, implementation uncertainty might even cause earlier investment if the probability of uncertainty resolution exceeds the opportunity cost of delaying investment. Investment will be earlier, the higher the effect of uncertainty resolution on project profitability.

Suggested Citation

Tsekrekos, Andrianos E., Investment Under Economic and Implementation Uncertainty (February 1, 2000). R&D Management, vol. 31, no. 2, pp. 127-135, 2001, Available at SSRN: https://ssrn.com/abstract=2365730

Andrianos E. Tsekrekos (Contact Author)

Athens University of Economics and Business - Department of Accounting and Finance ( email )

76 Patission Street
GR-104 34 Athens
Greece

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
23
Abstract Views
384
PlumX Metrics