1 The Importance of Irreversibility and Learning - Familiar 11 Bxamples Revisited 1. 1 Neoclassical Investment Models: A Brief Survey 11 1. 1. 1 The Standard Neoclassical Investment Theory Model 13 1. 1. 2 The Investment Model with Adjustment Costs 15 1. 1. 3 The Irreversibility of Investment 17 1. 1. 4 Delivery Lags 18 1. 2 Flexible Manufacturing Systems 22 1. 2. 1 Some Basic Facts about Manufacturing 23 1. 2. 2 The Determinants of the Flexibility of Manufacturing Systems 25 1. 2. 3 Manufacturing as a Multiperiod Choice Problem 28 1. 3 Conclusions 30 2 The Role of Irreversibility and Learning in Sequential Decision Problems - Basic Concepts 33 2. 1 The Two-Period Model without Uncertainty 33 2. 1. 1 The Elements of the Model 34 2. 1. 2 Economic Examples 37 2. 1. 3 Some Basic Results 39 2. 1. 4 Intertemporal Opportunity Costs 42 2. 2 The Two-Period Model with Uncertainty 46 2. 2. 1 The Elements of the Kodel 46 2. 2. 2 Special Cases 50 2. 2. 3 Flexibility and the Value of Information 54 2. 2. 4 An Example: Waiting to Invest 56 2. 3 Switching Costs 59 2. 3. 1 The Extended Model 59 2. 3. 2 An Example: Money Demand as Demand for Flexibility 61 2. 4 Summary and Outlook 63 3 Determinants of the Optimal Choice in Sequential Decision Problems - The Two-Period Case 65 3. 1 The Formulation of the Problem 66 3. 1.

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This book provides a systematic approach to sequentialdecision problems from the vantage point of economic theory.The emphasis is on the interplay between irreversibility,uncertainty and information. In particular, it is shown howflexibility (liquidity) considerations can be modelled in ageneral choice-theoretical framework.The book ties together differentstrands of literature. Thisaim is achieved by working in a sufficiently generalframework that is illustrated by means of examples fromcapital and investment theory, environmental economics(including option value theory), monetary theory andmanagement science.The systematic treatment of the subject is novel. Inaddition, a considerable number of newresults are proved,particularly in chapter 3.The reader can expect a relatively straightforwardintroduction to central ideas of intertemporal decisionproblems under uncertaintly, which he/she would otherwisehave to extract from a rather disperse literature.

Contenu
1 The Importance of Irreversibility and Learning Familiar Examples Revisited.- 1.1 Neoclassical Investment Models: A Brief Survey.- 1.2 Flexible Manufacturing Systems.- 1.3 Conclusions.- 2 The Role of Irreversibility and Learning in Sequential Decision Problems Basic Concepts.- 2.1 The Two-Period Model without Uncertainty.- 2.2 The Two-Period Model with Uncertainty.- 2.3 Switching Costs.- 2.4 Summary and Outlook.- 3 Determinants of the Optimal Choice in Sequential Decision Problems The Two-Period Case.- 3.1 The Formulation of the Problem.- 3.2 The Influence of the Choice Set.- 3.3 The Impact of the Decision Criterion.- 3.4 The Impact of the Information Structure.- 3.5 The Two-Period Model Final Thoughts.- 4 A T-Period Model of Intertemporal Choice with Irreversibility and Uncertainty.- 4.1 The General T-Period Model of Choice.- 4.2 Some Generalities on Intertemporal Planning.- 4.3 Modelling Rolling Myopic Plans.- 4.4 Final Remarks on the T-Period Model.- 5 Consumption and Savings Decisions of Households.- 5.1 Motives for the Demand for Money Some Familiar Tenets.- 5.2 The Structure of the Model.- 5.3 Money Demand when there are no Transaction Costs.- 5.4 Transaction Costs.- Epilogue.- References.