incomplete information) and empowerment on trust (investment by a principal) and trustworthiness (reciprocal behavior of an agent …). We implement a simple two-person investment game. We find that when principals are empowered by being able to punish … agents who may not act in a way the principal believes is in the principal’s best interest, trust and investment increases …

arise in this sunk-investment setting, even though our matching market is competitive. These equilibria exhibit …

on that firm's investment decisions. Ordered probit estimation results show that if a firm makes more expectation errors … -faces more uncertainty- it is more likely to defer investment plans even after controlling the aggregate uncertainty. …

We provide theoretical and empirical evidence that policy uncertainty can significantly affect firm level investment … dynamic, heterogeneous firms model we show that: (i) investment and entry into export markets is reduced when trade policy is … theory-based measure of policy uncertainty. Our novel approach using observable trade policies allows us to estimate the …

investment. Uncertainty increases real option values making firms more cautious when investing or disinvesting. This is confirmed … both numerically for a model with a rich mix of adjustment costs, time-varying uncertainty, and aggregation over investment … investment response to demand shocks. This implies the responsiveness of firms to any given policy stimulus may be much lower in …

Non-strategic firms with rational expectations make investment and emissions decisions. The investment rule depends on … taxes create a secondary distortion at the investment stage, unless a particular condition holds; emissions quotas do not …