This study develops three heuristics to measure financial optimism: financial expectation, a priori optimism, and a posteriori optimism. This paper finds that financial optimism has a significant positive effect on risk taking behaviour. Optimistic investors choose risky portfolios over...

Despite a large body of literature on the topic, empirical tests of real option models are scarce. The lack of data offers an initial explanation for this. However other intrinsic reasons could well explain why real options are difficult to test on large-scale studies. We show that the use of...

The electricity industry is undergoing a substantial process of restructuring, with an emphasis on the introduction of competition in the generation sector. Traditional planning methods are not necessarily appropriate for this new environment. This paper extends a previously developed linear...

This paper examines the debate over the gains from trade when international differences in the risk perception of heterogeneous managers provide the basis for trade: the relatively optimistic country exports the risky commodity whereas the relatively pessimistic country exports the certain...

We define a repairable asset as an irreplaceable commodity whose quality is at risk, but can be partly restored at a cost. Examples are houses, automobiles and, especially, health, for which standard monetary approaches are oversimplified. To optimize the value of insurance, the insurer and the...

This article looks at the Enron affair in terms of a diagnosis of the corporation's strategic choices. The authors show how analysts could have predicted Enron's difficulties in view of the incoherence observed in its strategic decisions, from the viewpoint of the theory of resource-based and...