This article demonstrates that the usefulness of time-state contingent investment evaluation models need not be constrained by limited time-state contingent markets. Dual solutions to stochastic programs can be used to obtain firm-specific values for risky investments while allowing linear dependence between initial values and later time-state contingent income-technical coefficients. The model could be useful when the exogenous a priori determination of appropriate (and project-specific) risk-adjusted discount rates and/or certainty equivalents is difficult or when the cash equivalents of noncash investment effects are difficult to estimate.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.