The investment-uncertainty relationship: A critical discussion

Only recently the general assumption of a negative investment-uncertainty relationship has been questioned in the literature and some examples of a nonmonotonic investment-uncertainty relationship have been found. By analyzing the influence of uncertainty on the probability to invest in a given time we show that the non-monotonicity of this relationship is not an exemption but the rule. Furthermore, we analyze and discuss the strengths and weaknesses of the different interpretations of the investment-uncertainty relationship and verify by an example that the investment-uncertainty relationship may stay ambiguous as its sign critically depends on the interpretation as well as on time.