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Flexibilty and Uncertainty

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  • 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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    References listed on IDEAS

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