Flexibility and Adjustment to Information in Sequential Decision Problems

1 The Importance of Irreversibility and Learning - Familiar 11 Bxamples Revisited 1. 1 Neoclassical Investment Models: A Brief Survey 11 1. 1. 1 The Standard Neoclassical Investment Theory Model 13 1. 1. 2 The Investment Model with Adjustment Costs 15 1. 1. 3 The Irreversibility of Investment 17 1. 1. 4 Delivery Lags 18 1. 2 Flexible Manufacturing Systems 22 1. 2. 1 Some Basic Facts about Manufacturing 23 1. 2. 2 The Determinants of the Flexibility of Manufacturing Systems 25 1. 2. 3 Manufacturing as a Multiperiod Choice Problem 28 1. 3 Conclusions 30 2 The Role of Irreversibility and Learning in Sequential Decision Problems - Basic Concepts 33 2. 1 The Two-Period Model without Uncertainty 33 2. 1. 1 The Elements of the Model 34 2. 1. 2 Economic Examples 37 2. 1. 3 Some Basic Results 39 2. 1. 4 Intertemporal Opportunity Costs 42 2. 2 The Two-Period Model with Uncertainty 46 2. 2. 1 The Elements of the Kodel 46 2. 2. 2 Special Cases 50 2. 2. 3 Flexibility and the Value of Information 54 2. 2. 4 An Example: Waiting to Invest 56 2. 3 Switching Costs 59 2. 3. 1 The Extended Model 59 2. 3. 2 An Example: Money Demand as Demand for Flexibility 61 2. 4 Summary and Outlook 63 3 Determinants of the Optimal Choice in Sequential Decision Problems - The Two-Period Case 65 3. 1 The Formulation of the Problem 66 3. 1.

1 The Importance of Irreversibility and Learning Familiar Examples Revisited. - 1. 1 Neoclassical Investment Models: A Brief Survey. - 1. 2 Flexible Manufacturing Systems. - 1. 3 Conclusions. - 2 The Role of Irreversibility and Learning in Sequential Decision Problems Basic Concepts. - 2. 1 The Two-Period Model without Uncertainty. - 2. 2 The Two-Period Model with Uncertainty. - 2. 3 Switching Costs. - 2. 4 Summary and Outlook. - 3 Determinants of the Optimal Choice in Sequential Decision Problems The Two-Period Case. - 3. 1 The Formulation of the Problem. - 3. 2 The Influence of the Choice Set. - 3. 3 The Impact of the Decision Criterion. - 3. 4 The Impact of the Information Structure. - 3. 5 The Two-Period Model Final Thoughts. - 4 A T-Period Model of Intertemporal Choice with Irreversibility and Uncertainty. - 4. 1 The General T-Period Model of Choice. - 4. 2 Some Generalities on Intertemporal Planning. - 4. 3 Modelling Rolling Myopic Plans. - 4. 4 Final Remarks on the T-Period Model. - 5 Consumption and Savings Decisions of Households. - 5. 1 Motives for the Demand for Money Some Familiar Tenets. - 5. 2 The Structure of the Model. - 5. 3 Money Demand when there are no Transaction Costs. - 5. 4 Transaction Costs. - Epilogue. - References.