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Uncertainty has an almost negligible impact on project value in the economic standard model. I show that a comprehensive evaluation of uncertainty and uncertainty attitude changes this picture fundamentally. The analysis relies on the discount rate, which is the crucial determinant in balancing...
Persistent link: https://www.econbiz.de/10009645646
The paper develops an axiomatic framework for rational decision making. The von Neumann-Morgenstern axioms give rise to …)actions, the more weight they receive. If uncertainty is endogenous to the decision process, the new rationale for discounting will …
Persistent link: https://www.econbiz.de/10010544183