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Received: 2003-11-18

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Journal of Zhejiang University SCIENCE A 2005 Vol.6 No.4 P.334~338

http://doi.org/10.1631/jzus.2005.A0334


Research of relationship between uncertainty and investment


Author(s):  MENG Li, WANG Ding-wei

Affiliation(s):  School of Information Science & Engineering, Northeastern University, Shenyang 1100006, China; more

Corresponding email(s):   menliweida@vip.sina.com

Key Words:  Investment, Uncertainty, Real option, Stochastic process


MENG Li, WANG Ding-wei. Research of relationship between uncertainty and investment[J]. Journal of Zhejiang University Science A, 2005, 6(4): 334~338.

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journal="Journal of Zhejiang University Science A",
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pages="334~338",
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publisher="Zhejiang University Press & Springer",
doi="10.1631/jzus.2005.A0334"
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T1 - Research of relationship between uncertainty and investment
A1 - MENG Li
A1 - WANG Ding-wei
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DOI - 10.1631/jzus.2005.A0334


Abstract: 
This study focuses on revealing the relationship between uncertainty and investment probability through real option model involving investment critical trigger and project earning. Use of Matlab software on the experimental results showing that project earning volatility influences investment probability, led the authors to conclude that this notion is not always correct, as increasing uncertainty should have an inhibiting effect on investment, and that in certain situation, increasing uncertainty actually increases the investment probability and so, should have positive impact on investment.

Darkslateblue:Affiliate; Royal Blue:Author; Turquoise:Article

Reference

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[13] Metcalf, G.E., Hassett, K.A., 1995. Investment under alternative return assumptions: comparing random walks and mean reversion. Journal of Economic Dynamics and Control, 19:471-1488.

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