We study a sequential decision problem in which a firm has the option to invest in a project and can learn about the future profitability of this project prior to investment. The decision process is split into two stages. In the first stage the firm decides whether and how much to invest in...

Models of investment under uncertainty mostly concern the firm's stochastic environment as exogenously given and subject to constant characteristics. We consider a firm that can sequentially invest to alter the growth rate of a project through a revenue-enhancing pre-investment activity prior to...

Private companies (PCs) in restructured infrastructure industries, e.g., energy and transportation, determine facility investment timing and sizing. Such decisions maximize the PC's expected profit (rather than social welfare) under uncertainty. By anticipating the PC's incentives, a...