Dixit and Pindyck (1994) claim that the Jorgensonian rule of investment (Jorgenson, 1963) does not hold in uncertain settings. This note shows that the validity of that claim depends crucially on the particular process chosen to describe the economic uncertainty. In fact, the Jorgensonian rule...

Abstract This paper appeals to the interplay between network effects and quality to justify the use of planned obsolescence by well-settled firms. We propose a simple contagion model to analyze an asymmetric duopoly market where an incumbent firm benefits, at least initially, from the...

We consider an agency relationship under moral hazard in a context where principal and agent can have asymmetric priors on the output distribution. We provide sufficient conditions under which the principal finds it optimal to adhere to the agent’s beliefs, as if the common prior assumption...

We consider an agency relationship under moral hazard in a context where principal and agent have asymmetric priors on the output distribution. We provide sufficient conditions under which the principal finds it optimal to adhere to the agent’s beliefs (as if the common prior assumption holds)