Whether they are financial, economic, or psychological, discount rates affect most economic decisions: investment and savings, hirings and firings, defaults and refinancing, financial and economic reforms, learning and experimentation, and any other decision with long-term consequences, such as...

We consider the provision of venture capital in a dynamic model with multiple research stages, where time and investment needed to meet each benchmark are unknown. The allocation of funds is subject moral hazard. The optimal contract provides for incentive payments linked to attaining the next...

This paper presents a model of investment in projects that are characterized by (i) uncertainty over both the construction costs and revenues, and (ii) revenues that accrue only after construction is completed. Both processes are modeled as spectrally negative Levy jump-diffusions. The optimal...