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Flexibilty and Uncertainty

Author

Listed:
  • Robert A. Jones

    (UCLA)

  • Joseph M. Ostroy

    (UCLA)

Abstract

The preserving of flexibility when faced with uncertainty is a neglected aspect of behaviour under risk. Yet it is an important factor in decisions to hold liquid assets or delay irreversible investment. This paper formalizes the notion of flexibility in a sequential decision context, and relates its value to the amount of information an agent expects to receive. A rudimentary money demand model is developed embodying these ideas, and the history of flexibility as an economic concept is traced.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Robert A. Jones & Joseph M. Ostroy, 1979. "Flexibilty and Uncertainty," UCLA Economics Working Papers 163, UCLA Department of Economics.
  • Handle: RePEc:cla:uclawp:163
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    File URL: http://www.econ.ucla.edu/workingpapers/wp163.pdf
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    References listed on IDEAS

    as
    1. J. Tobin, 1958. "Liquidity Preference as Behavior Towards Risk," Review of Economic Studies, Oxford University Press, vol. 25(2), pages 65-86.
    2. Cummings, Ronald G & Norton, Virgil, 1974. "The Economics of Environmental Preservation: Comment," American Economic Review, American Economic Association, vol. 64(6), pages 1021-1024, December.
    3. Cropper, M L, 1976. "A State-Preference Approach to the Precautionary Demand for Money," American Economic Review, American Economic Association, vol. 66(3), pages 388-394, June.
    4. Fisher, Anthony C & Krutilla, John V & Cicchetti, Charles J, 1972. "The Economics of Environmental Preservation: A Theoretical and Empirical Analysis," American Economic Review, American Economic Association, vol. 62(4), pages 605-619, September.
    5. Goldman, Steven Marc, 1974. "Flexibility and the demand for money," Journal of Economic Theory, Elsevier, vol. 9(2), pages 203-222, October.
    6. George Stigler, 1939. "Production and Distribution in the Short Run," Journal of Political Economy, University of Chicago Press, vol. 47, pages 305-305.
    7. Smith, Kenneth R., 1969. "The effect of uncertainty on monopoly price, capital stock and utilization of capital," Journal of Economic Theory, Elsevier, vol. 1(1), pages 48-59, June.
    8. Nickell, Stephen J, 1977. "The Influence of Uncertainty on Investment," Economic Journal, Royal Economic Society, vol. 87(345), pages 47-70, March.
    9. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
    10. Abrassart, A Eugene & McFarlane, Dale D, 1974. "The Economics of Environmental Preservation: Comment," American Economic Review, American Economic Association, vol. 64(6), pages 1025-1029, December.
    11. Grossman, Herschel I, 1969. "Expectations, Transactions Costs, and Asset Demands," Journal of Finance, American Finance Association, vol. 24(3), pages 491-506, June.
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