Investment Scenarios Research Articles

Preliminary evidence on the somatic marker hypothesis applied to investment choices.

The somatic marker hypothesis is one of the more dominant physiological models of human decision-making and yet is seldom applied to decision-making in financial investment scenarios. This study provides preliminary evidence about the application of the somatic marker hypothesis in investment choices using heart rate and skin conductance response measures. Twenty undergraduate students were split equally into expert (defined by familiarity with investments) and novice (no familiarity) groups, because previous research has associated expertise with cognitive differences in decision making scenarios. Both groups completed the Balloon Analogue Risk Task and Behavioral Investment Allocation Strategy task-a computerized simulation of real trading scenarios- as assessments of investment decision-making in conditions of low versus high uncertainty, as defined by the Bayesian calculation (level of certainty is more than: (1 - (-300%))/(300% - (-300%)) = 66.67% (0.67). Results suggest that, although primary inducers (innate physiological responses) support and guide optimal decision-making in conditions of uncertainty, secondary inducers (physiological responses dependent on memory/experience) moderate this effect; that is, the stressful thoughts that accompany the task restrict optimal decision-making. This study contributes to the current knowledge on why emotions in finance can lead people to suboptimal decisions.

Exploring the distributional impact of investment in the port sector on households in Mauritius: A social accounting matrix approach

Research on the role that growth in the Ocean Economy can play on poverty reduction and income inequality has been limited to date. Using a Social Accounting Matrix framework this paper examines the distributional effects of investment in the port sector on employees and households in Mauritius. Two investment scenarios (conservative, US$1089 million and optimistic, US$1332 million) are considered. The results suggest that in the short term, investment in the development of the port sector would have an overall positive impact on the Mauritian economy. Poor and lower middle-income households would receive a very small positive impact, as would employees with lower education levels. However, in the medium to long term, impacts at the household level would be uneven with wealthy households and employees with university education receiving the greatest benefit. These results suggest the need for complementary redistributive policies.

Different Scenarios of Investments in Georgia’s Energy Sector

Various types of recent research point out the fact that Georgia’s energy sector (and in particular hydro energy sector) is one of the most attractive ones when it comes to investment opportunities. Hydro power remains the cheapest and the most “ecofriendly” source of power for Georgia. An essential part of Georgia’s hydro energy potential is still untapped (in fact, the current electricity generation represents just about 40% of Georgia’s estimated annual hydropower output potential). Currently, Ministry of Energy of Georgia has more than 60 HPP projects available for investment. For every potential investor, it is of vital importance to have general knowledge about what to expect from the desired sector, what the risks that could hurt the success of the investment are and if the expected rate of return equals or exceeds his or her required rate of return. This article is based on our previous article and develops three different scenarios forinvestment opportunities in Georgia’s Hydro Energy sector. For all three scenarios expectations are evaluated and sensitivity analysis is provided.Keywords: energy sector, investment, hydro energyJEL: G17

Roles and Effects of Access Regulation in 5G Markets

5G wireless services will constitute an integral part of the future gigabit communication network infrastructure. Policy makers worldwide are striving to design legal and regulatory frameworks that best support 5G services. There is wide agreement that a competitive sector organization is superior, but the emerging models differ in the specific roles assigned to policy and regulation. This study explores the implications of alternative policy scenarios for innovation and investment in 5G networks and services. Before the backdrop of the policy discussions in Europe and in the United States, we examine the likely effects of regulatory instruments within a framework of complementary innovation. To assess the joint effect of regulation on the 5G value system, we develop three scenarios (entrepreneurship, regulated competition, policy-push) and discuss the advantages and disadvantages of each. A key challenge for 5G is the exploration of the tremendous innovation opportunities space. Regulatory interventions affect players in this value system differently so that the overall effects on innovation and investment are contingent on the relative strength of partial effects. Given the importance of innovation and the unique characteristics of the 5G value system, we conclude that the entrepreneurship model with safeguards to protect the competitive process and desirable forms of non-discrimination is the most promising approach. Ex post regulation and competition policy are better aligned with these goals than traditional forms of ex ante regulation.

Woodworking Facilities: Driving Efficiency through Automation Applied to Major Process Steps

The investment scenario applied to forestry development analyzes the fundamental changes in the production structure, among other things. These changes refer to the priority development of the pulp and paper industry through the chain of large-scale woodworking facilities, where pulp, paper and cardboard manufacturing plants are the key links. Such facilities include sawmilling facilities, wood-processing factories, and timber factories. Those provide a significant economic benefit, so improving them is one of the top priorities. Considering this priority is the purpose of this article. The goal was achieved using common and scientific research methods, including mathematical modeling.Theoretical research resulted in three sets of formulas adapted for evaluating the pulpwood barking from theoretical findings on image recognition.

Behavioral Investments in the Short Term Fail to Produce a Sunk Cost Effect

A cognitive bias known as the sunk cost effect has been found across a number of contexts. This bias drives the continued investment of time, effort, or money into an endeavor on the basis of prior investments into it. In Studies 1 and 2, we attempted to observe whether this effect occurs for short-term behavioral investments. In both studies, a reverse, or no sunk cost effect was found. In Study 3, we attempted to find an effect using hypothetical scenarios that were analagous to the behavioral investments presented in Study 1. This also failed to reveal an effect. Finally, Study 4 was an attempt to replicate a previously used hypothetical investment scenario; with results this time revealing the effect. A number of explanations for this pattern of results, such as participation and salient physical exertion, are discussed, with the possibility that some short-term behavioral investments are not subject to the sunk cost effect.

Water environment carrying capacity in Bosten Lake basin

By combining a system dynamics (SD) model and an analytic hierarchy process (AHP), an evaluation index system for water environment carrying capacity (WECC) in the Bosten Lake basin was developed that considers mutual interactions among six subsystems of industry, agriculture, population, water supply, water ecology, and water pollution. The model was tested with data including water level, surface area, water volume, chemical oxygen demand (COD) concentration, total nitrogen (TN) concentration, and salinity concentration observed for 2002–2010. In addition, the model was applied to study and compare the trend of WECC under seven scenarios from 2002 to 2024. The results indicated that the WECC trends of industrial water consumption drop 0.5% each year (Scenario 2) and water transport from Bosten Lake to the Tarim River of 0.5 billion m3 each year (Scenario 6) were the same as Scenario 1 (present mode), which means that Scenario 2 and Scenario 6 cannot improve the WECC of Bosten Lake. As for the other four scenarios, the effects on the WECC of Bosten Lake were in the order of increase ground water exploitation (Scenario 7) > water-saving irrigation investment (Scenario 4) > increase reed area (Scenario 5) > increase industrial water reutilization rate (Scenario 3). Although the four scenarios can improve the WECC of Bosten Lake, only Scenario 7, i.e. increasing ground water exploitation rate by 3%, can turn the carrying status of WECC from poor to good. In addition, population and concentrations of COD, TN, and salinity will improve in the improved scheme compared to the present mode. The sensitivity of three parameters including the growth rate of water demand per 104 USD, growth of reutilization rate in industrial water, and ecological water transport were analyzed. The results indicated that both growth rate of water demand per 104 USD and growth of reutilization rate in industrial water increased the WECC of Bosten Lake. Moreover, the WECC of Bosten Lake will be negatively affected when the water quantity of ecological water transport from Bosten Lake to the Tarim River exceeds 1 billion m3. The results provide a scientific basis for a reasonable development pattern in protecting the WECC of Bosten Lake.

A simulation model proposal to improve the productivity of container terminal operations through investment alternatives

ABSTRACTDevelopment of a container terminal (CT) closely deals with the efficiency of operating systems. This paper proposed a model to decide optimum investment alternatives to improve CT productivity. The proposed approach incorporates the parameters such as number of quay cranes, total length of a quay, yard trucks and yard cranes. The objectives of the model are minimizing the average ship turnaround time while maximizing the container throughput generated by the terminal. The methodology behind the model includes Discrete Event Simulation Model, data envelopment analysis (DEA) and cost-efficiency analysis. Considering container ship visits to Container Terminal Alpha (CT-A), the proposed model is demonstrated with 16 different investment scenario along with 10-months recorded operational data. The results addressed the Scenario LENG-2 (extent current total length of quays from 1.560 meters to 2.000 meters) as the optimal feasible solution for an investment in existing conditions. The model is also considered to besides contributions to investment decisions in CT, the developed framework might be extended to other transportation infrastructures.

ARE HIGHER WAGES GOOD FOR BUSINESS? AN ASSESSMENT UNDER ALTERNATIVE INNOVATION AND INVESTMENT SCENARIOS

This paper aims at investigating the interplay between inequality, innovation dynamics, and investment behaviors in shaping the long-run patterns of growth of a closed economy. By extending the analysis proposed in Caiani et al. [(2018) Journal of Evolutionary Economics], we explore the effects of alternative wage regimes under different investment and technological change scenarios. Experimental results seem to de-emphasize the role of technological progress as a possible source of greater inequality. Overall, simulation results are consistent with the predominance of a wage-led growth regime in most of the scenarios analyzed: A faster growth of low- and middle-level workers’ wages, relative to managers’, generally exert beneficial effects on the economy and allows to counteract the labor-saving effects of technological progress. Furthermore, a distribution more favorable to workers does not compromise firms’ profitability, but rather strengthen it by creating a more favorable macroeconomic environment, which encourages further innovations, stimulates investment, and sustains economic growth.

Probabilistic green infrastructure cost calculations using a phased life cycle algorithm integrated with uncertainties

Abstract Green infrastructure (GI) is often considered a cost-effective approach to urban stormwater management. Though various models have been created to simulate the life cycle cost (LCC) and present value (PV) of GI investments, decision-support tools are still few. This paper introduces a probabilistic GI cost estimation algorithm built into the Low Impact Development Rapid Assessment (LIDRA) model. This algorithm tracks annual and cumulative costs associated with the construction, operation and maintenance (O&M), and ultimate replacement of GI systems. In addition, the algorithm accounts for uncertainties in cost drivers, such as a GI's useful life (until replacement), capital and annual O&M costs, inflation, and interest rates. Net present value (NPV) is used to normalize future money flows and cumulative costs of different GI investment scenarios into a comparable current year cost equivalent. Demonstrated at the block scale, the results of the LIDRA algorithm are compared to an MS Excel-based computation of average costs. Variations of uncertainties are then integrated and further explored using an alternative implementation rate. This algorithm is a way to evaluate GI costs considering physical, socioeconomic and life cycle dimensions.

Impact of solar power projects on LMP and transmission losses in Oman

This study investigates the effect of future solar power projects on the locational marginal prices (LMP) in the main interconnected system of Oman. The study includes modeling the existing transmission network and simulating system performance during peak period. Two investment scenarios were investigated: large localized solar project and small geographically dispersed projects. In addition, the effect of both scenarios on transmission system losses is simulated.

Go Upscale? Quality Competition between National Brand and Store Brand

It is commonly assumed in private label literature that store brands are of lower quality than competing national brands. In this paper, we contest this notion by studying quality competition between a national- brand manufacturer and a store-brand retailer. The manufacturer sells its national-brand products through the retailer who produces a competing store brand at the same time. The two parties first invest in their brand qualities, after which the manufacture determines the wholesale price for the national brand and the retailer decides the retail prices for both brands. With a general quality-dependent cost structure, we explicitly characterize the equilibrium in both price and quality levels under various channel power structures. The results suggest that the store brand could possibly be of higher quality than the national brand even in absence of cost disparity; however, the store brand will charge a lower retail price whether its quality is superior to the national brand or not. Further, price competition and quality competition bear opposite implications on equilibrium solutions as well as profitability levels. Surprisingly, the manufacturer may benefit from a more costly production or quality investment scenario, while both the retailer and the supply chain will suffer from the same. The paper highlights the importance of accounting for quality decisions in the study of private label products.

Energy consumption, fuel substitution, technical change, and economic growth: Implications for CO2 mitigation in Egypt

Energy consumption propels economic growth but the level of CO2 emissions associated with a fossil-dominated energy structure raises concerns for the fight against climate change. To draw consensus, this study develops a translog-causality-based model in order to study causation between electricity, natural gas, petroleum, and economic growth in Egypt. In addition, the models’ results are used to estimate the substitution possibilities between various energy pairs and to subsequently test the CO2 mitigation benefits arising from fuel substitution. Results support a bidirectional relationship between all energy types and economic growth in Egypt and suggest, also, that these energy types are substitutes. Although technical progress is estimated to be a bit slow (varying between 4.5% and 7.5%), there appears to be substantial CO2 emissions mitigation benefits from fuel substitution amounting to reductions in the range of 1.5 and 2.2 million metric tons under a 5% investment scenario and 2.5 and 4.5 million metric tons under a 10% investment scenario. These results have broader implications for energy conservation policies and industrial merger policies in developing countries. Moreover, by studying technical change, insights are provided on future CO2 mitigation potential driven by energy efficiency.

Food security outcomes under a changing climate: impacts of mitigation and adaptation on vulnerability to food insecurity

Climate change is a potential threat to achieving food security, particularly in the most food insecure regions. However, interpreting climate change projections to better understand the potential impacts of a changing climate on food security outcomes is challenging. This paper addresses this challenge through presenting a framework that enables rapid country-level assessment of vulnerability to food insecurity under a range of climate change and adaptation investment scenarios. The results show that vulnerability to food insecurity is projected to increase under all emissions scenarios, and the geographic distribution of vulnerability is similar to that of the present-day; parts of sub-Saharan Africa and South Asia are most severely affected. High levels of adaptation act to off-set these increases; however, only the scenario with the highest level of mitigation combined with high levels of adaptation shows improvements in vulnerability compared to the present-day. The results highlight the dual requirement for mitigation and adaptation to avoid the worst impacts of climate change and to make gains in tackling food insecurity. The approach is an update to the existing Hunger and Climate Vulnerability Index methodology to enable future projections, and the framework presented allows rapid updates to the results as and when new information becomes available, such as updated country-level yield data or climate model output. This approach provides a framework for assessing policy-relevant human food security outcomes for use in long-term climate change and food security planning; the results have been made available on an interactive website for policymakers (www.metoffice.gov.uk/food-insecurity-index).

NEW INVESTMENT DECISION-MAKING TOOL THAT COMBINES A FUZZY INFERENCE SYSTEM WITH REAL OPTION ANALYSIS

This paper proposes a new procedure for enriching investment and real option analysis performed with the fuzzy pay-off method by decomposing the pay-off distribution into multiple sub-distributions that correspond to different investment scenarios. This creates more information about the importance of the effect of selected factors to investment profitability. Furthermore, based on the proposed procedure, we show how a fuzzy inference system to support investment decision-making can be constructed. The proposed new procedure and the application of a fuzzy inference system are illustrated with a numerical case analysis of a power generation investment. The results show that the proposed new procedure reveals actionable information about the analyzed investment that may otherwise remain uncovered and enhances the decision-making ability of investment managers. The application of a fuzzy inference system to investment decision-support and real option analysis is a rather new approach. The obtained results highlight how the construct of a fuzzy inference system must be adapted to the perspective of the application for which it is used.

Renewable Energy Investment for Middle and Upper Class Housing Sector in Indonesia: Investigating the Scope for a Change in Policy

The household sector plays an important role in the energy demand in Indonesia. Households consume more than 50% of total energy in many major cities in Indonesia and account for 34% of the total energy demand. The main share of capital allocation and attention, however, has gone to rural electrification programs over the past years with mixed results, due to an abundance of problems during the operation phase. We propose that government attention and capital should be broadened to policy development for solar home systems for urban areas. The problems that are encountered by rural electrification projects are mainly due to a lack of resources and unclear task allocation between involved parties and difficulties of addressing problems in remote environments. These risks are insignificant in urban areas where maintenance services are available and where solar home systems can be commercially interesting for higher income consumers without the need for subsidy. By means of a cost benefit analysis, this paper shows that solar home systems can be commercially interesting for households in urban areas. Different investment scenarios were worked out with systems costing 5%, 10%, and 15% of the total average house price. The analysis indicates that the policy is feasible when solar systems are coupled to the grid but not for off-grid systems. This is because the battery leads to high investment and maintenance cost. From a government point of view, developing policy towards renewable energy usage in urban households could help to reach national electrification and environmental targets without extra capital allocation as well as relieve pressure on the already overburdened state electricity company, the PLN.

Parental Beliefs About Returns to Child Health Investments

Childhood obesity has adverse health and productivity consequences and poses negative externalities to health services. Its increase in recent decades can be traced back to unhealthy habits acquired in the household. We investigate whether parental beliefs play a role by eliciting beliefs about the returns to a recommended-calorie diet and regular exercise using hypothetical investment scenarios. We show that perceived returns are predictive of health investments and outcomes, and that less educated parents perceive the returns to health investments to be lower, thus contributing to the socioeconomic inequality in health outcomes and the intergenerational transmission of obesity.

Real Options Analysis of Renewable Energy Investment Scenarios in the Philippines

With the continuously rising energy demand and much dependence on imported fossil fuels, the Philippines is developing more sustainable sources of energy. Renewable energy seems to be a better alternative solution to meet the country’s energy supply and security concerns. Despite its huge potential, investment in renewable energy sources is challenged with competitive prices of fossil fuels, high start-up cost for renewables, and lower feed-in-tariff rates for renewables. To address these problems, this study aims to analyze energy investment scenarios in the Philippines using real options approach. This compares the attractiveness of investing in renewable energy over continue using coal for electricity generation under uncertainties in coal prices, investments cost, electricity prices, growth of investment in renewables, and imposing carbon tax for using fossil fuels.

The Impacts of Financing Investment Scenarios on Piped-Natural Gas Prices (GPs) for Households in Indonesia

The Impacts of Financing Investment Scenarios on Piped-Natural Gas Prices (GPs) for Households in Indonesia

Dialectical beliefs and savings tendency: Opposite patterns in good versus bad current status

AbstractPeople often experience a dilemma: whether we should invest now for a better future or save now for an unexpected future. The current research investigated the influence of dialecticism, a constellation of lay beliefs stating that the world is full of constant changes, coexisting contradictions, and interdependent relationships, on people's savings tendencies when they are with good versus bad status. Study 1 verified that dialectical beliefs were negatively associated with optimistic expectations among people with good status (i.e., high socioeconomic status) but positively associated with optimistic expectations among people with bad status (i.e., low socioeconomic status). Next, Studies 2 and 3 examined the interaction effect between dialectical beliefs and people's current status in predicting their savings tendencies in the investment scenarios with the focus on savings decision‐making and emotional experiences related to savings scenarios, respectively. Finally, to test generalizability, Study 4 examined people's savings tendencies in the situation that they needed to prevent failure instead of doing investments. The results converged to support the hypothesis that stronger dialectical beliefs predicted greater savings tendencies among people with good current status but weaker savings tendencies among people with bad current status. These findings demonstrated that the effect of dialectical beliefs on savings tendencies varies as a function of the characteristics of the situations, which advances the theoretical understanding of dialecticism in decision‐making research.