start-ver=1.4
cd-journal=joma
no-vol=293
cd-vols=
no-issue=1
article-no=
start-page=304
end-page=311
dt-received=
dt-revised=
dt-accepted=
dt-pub-year=2020
dt-pub=20201205
dt-online=
en-article=
kn-article=
en-subject=
kn-subject=
en-title=
kn-title=Optimal Investment under Ambiguous Technology Shocks
en-subtitle=
kn-subtitle=
en-abstract=
kn-abstract=This paper analyzes the behavior of a firm facing an ambiguous technology shock and the effects of the attitude toward ambiguity on optimal capital investment using the smooth ambiguity model of Klibanoffet al. (2005). Although it seems intuitive that an increase in ambiguity aversion always reduces the optimal capital investment, this is not necessarily true because the shape of the production function plays a key role in determining the effect. Under some conditions, we show that the optimal amount of capital investment increases (decreases) in ambiguity aversion if the production function is substitute (complement), and that this result is counterintuitive when the production function is substitute. Furthermore, our main results hold if we assume the alpha-maxmin preferences in Ghirardato et al. (2004). 
en-copyright=
kn-copyright=

en-aut-name=AsanoTakao
en-aut-sei=Asano
en-aut-mei=Takao
kn-aut-name=
kn-aut-sei=
kn-aut-mei=
aut-affil-num=1
ORCID=

en-aut-name=OsakiYusuke
en-aut-sei=Osaki
en-aut-mei=Yusuke
kn-aut-name=
kn-aut-sei=
kn-aut-mei=
aut-affil-num=2
ORCID=

affil-num=1
en-affil=Faculty of Economics, Okayama University
kn-affil=

affil-num=2
en-affil=Faculty of Commerce, Waseda University
kn-affil=
en-keyword=Decision analysis
kn-keyword=Decision analysis
en-keyword=Investment analysis
kn-keyword=Investment analysis
en-keyword=Capital investment
kn-keyword=Capital investment
en-keyword=Smooth ambiguity model
kn-keyword=Smooth ambiguity model
en-keyword=Technology shock 
kn-keyword=Technology shock 
END