Hostname: page-component-cd9895bd7-q99xh Total loading time: 0 Render date: 2024-12-23T05:30:22.966Z Has data issue: false hasContentIssue false

Quasi-option value and hard uncertainty

Published online by Cambridge University Press:  02 April 2001

MARCELLO BASILI
Affiliation:
Dipartimento di Economia Politica, Università di Siena, Piazza San Francesco, 53100, Siena, Italy. Email: [email protected]

Abstract

The notion of intertemporal h-option value is introduced to extend to environmental decision-making problems of the concept of quasi-option value, defined by Arrow and Fisher and Henry, whenever an individual faces imprecise information, or hard uncertainty, represented by a non-additive measure over events. Under hard uncertainty and irreversibility, the decision-maker faces the intertemporal h-option value, that is an uncertainty premium of preservation, which represents the gain from being able to learn about the future consequences of irreversible actions. The intertemporal h-option value is a correction factor that has to be taken into account in evaluating the total economic value of feasible actions.

Type
Theory and Applications
Copyright
© 1998 Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)