Irreversible investment in oligopoly

We offer a new perspective on games of irreversible investment under uncertainty in continuous time. The basis is a particular approach to solve the involved stochastic optimal control problems which allows to establish existence and uniqueness of an oligopolistic open loop equilibrium in a very general framework without reliance on any Markovian property. It simultaneously induces quite natural economic interpretation and predictions by its characterization of optimal strategies through first order conditions. The construction of equilibrium policies is then enabled by a stochastic representation theorem. A stepwise specification of the general model leads to further economic conclusions. We obtain explicit solutions for Lévy processes.irreversible investment, stochastic game, oligopoly, real options, equilibrium

Subgame-Perfect Equilibria in Stochastic Timing Games

We introduce a notion of subgames for stochastic timing games and the related notion of subgame-perfect equilibrium in possibly mixed strategies. While a good notion of subgame-perfect equilibrium for continuous-time games is not available in general, we argue that our model is the appropriate version for timing games. We show that the notion coincides with the usual one for discrete-time games. Many timing games in continuous time have only equilibria in mixed strategies -- in particular preemption games, which often occur in the strategic real option literature. We provide a sound foundation for some workhorse equilibria of that literature, which has been lacking as we show. We obtain a general constructive existence result for subgame-perfect equilibria in preemption games and illustrate our findings by several explicit applications.Comment: 27 pages, 1 figur

Morality and Prosocial Behavior: the Role of Awareness, Responsibility and Norms in the Norm Activation Model

This paper examines the relationships between variables included in the Norm Activation Model of prosocial behaviour (NAM). Specifically, we evaluate the strength of two commonly used interpretations of this model, namely the NAM as a mediator model and the NAM as a moderator model. Five studies focussing on a variety of prosocial intentions and behaviours provide most support for the NAM as a mediator model. Furthermore, these studies validate past research by showing that variables included in the NAM are powerful in explaining a diversity of prosocial intentions and behaviours in the social as well as in the environmental context

A Martian Quarantine Risk Model

Structured model using loss functions to assess risk of using given decontamination procedure on all Martian unmanned landing craf

SUSTAINABLE TRANSPORTATION A Psychological Perspective

This paper discusses possible contributions of psychologists to sustainable transportation. It is argued that in order to reach sustainable transportation, among others, behaviour changes of individual car users are needed. As transport policies will be more effective if they target important antecedents of travel behaviour, first, factors influencing such behaviour are discussed. It is argued that car use is very attractive and sometimes even necessary for many different reasons. This implies that a combination of policies is called for, each targeting different factors that support car use and hinder the use of more sustainable modes of transport. Next, the paper elaborates on policy strategies that may be employed to achieve sustainable transportation by changing car use. Increasing the attractiveness of sustainable transport modes by means of pull measures seems not sufficient to reduce the level of car use. Besides, car use should be made less attractive by means of push measures to force drivers to reconsider their travel behaviour. The acceptability of such policies may be increased by clearly communicating the aim of these policies, and the expected positive consequences (e.g., less congestion, improved environmental quality). Moreover, possible negative effects for individual freedom may be compensated by implementing additional policies aimed at facilitating the use of sustainable transport modes

Effects of revenue use and perceived effectiveness on acceptability of transport pricing policies

Car use causes various collective problems, such congestion and increasing CO2-emmisions. One way to manage these problems is to influence people’s car use. Pricing policies aimed at making car use more expensive, such as implementing congestion or kilometre charges, may be effective strategies to influence people’s car use. However, significant pricing policies are not easily implemented, since they are not acceptable to the public. Acceptability levels may dependent on the type of pricing policy being implemented. In this study we examined two policy characteristics that may affect the acceptability of pricing policies: revenue use and price level. It is hypothesised that pricing policies are more acceptable if price increases are rather low, and if revenues benefit individual car users rather than the general public. Further, we examined the relationship between policy acceptability and effectiveness. On the one hand we assume that policies are not acceptable if they are not effective in changing people’s car use. In that case, people experience the disadvantages of the policies while at the same time problems resulting from car use, such as congestion, are not being solved. On the other hand, policies that are very effective in changing one’s own car use are probably also not acceptable, because this seriously threatens people’s freedom to move. Thus, we hypothesise policies are acceptable if they reduce the problems of car use, without seriously affecting people’s own car use and freedom of choice.