Flexibility and Uncertainty

Robert Jones and Joseph Ostroy

The Review of Economic Studies, 1984, vol. 51, issue 1, 13-32

Abstract: The preserving of flexibility when faced with uncertainty is a neglected aspect of behaviour under risk. Yet it is an important factor in decisions to hold liquid assets or delay irreversible investment. This paper formalizes the notion of flexibility in a sequential decision context, and relates its value to the amount of information an agent expects to receive. A rudimentary money demand model is developed embodying these ideas, and the history of flexibility as an economic concept is traced.

Date: 1984
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Working Paper: Flexibilty and Uncertainty (1979)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:51:y:1984:i:1:p:13-32.

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