Centralization versus Delegation in an Experimental Capital Budgeting Setting

Rational Capital Budgeting in an Irrational World

Optimal Organization: Centralization, Decentralization or Delegation?

The paper addresses the issue of optimal organization of production. I compare three organizational forms: centralization (one agent produces different inputs), decentralization (each of two agents produces a different input and contracts directly with the principal), and delegation (two agents produce different inputs, the principal contracts only with one of them). The key issue in the compar...

Capital budgeting techniques using discounted fuzzy versus probabilistic cash flows

Risk analysis involves the development of the probability distribution for the measure of effectiveness. The risk associated with an investment alternative is generally either given as the possibility of an unfavorable value of the measure of effectiveness or measured by the variance of the measure of effectiveness. In an uncertain economic decision environment, an expert’s knowledge about disc...

Fuzzy capital budgeting

Fuzzy equivalents of all the classical capital budgeting (investment choice) methods are generalised or proposed. These equivalents can be used to evaluate and compare projects in which the cash ows, duration time and required rate of return (cost of capital) are given imprecisely, in the form of a fuzzy number. c © 2000 Elsevier Science B.V. All rights reserved.

Real Options – Capital Budgeting

Most investment decisions present the following three characteristics: • Irreversibility: The investment is partially or completely sunk, i.e. it cannot be recovered. • Uncertainty: The best that can be done is to assess the probabilities of the alternative outcomes that can imply larger or smaller profits. • Timing: The decision can be postponed in order to get more information (but never comp...