Terminal Investment Research Articles

Testing the Terminal Investment Hypothesis in California Oaks.

The terminal investment hypothesis-which proposes that reproductive investment should increase with age-related declines in reproductive value-has garnered support in a range of animal species but has not been previously examined in long-lived plants, such as trees. We tested this hypothesis by comparing relative acorn production and radial growth among 1,000+ mature individuals of eight species of California oaks (genus Quercus) followed for up to 37 years, during which time 70 trees died apparently natural deaths. We found no significant differences in the radial growth, acorn production, or index of reproductive effort, taking into consideration both growth and reproduction among dying trees relative to either conspecific trees at the same site that did not die or growth and reproduction from earlier years for the focal trees that did eventually die. Furthermore, we found no consistent trade-off between growth and reproduction among trees that died, nor did dying trees significantly alter their relative investment in reproduction even as they underwent physical decline. Trees approaching the end of their lives are often in poor physical condition but do not appear to differentially invest more of their diminished resources in reproduction compared with healthy trees.

Expropriation risk and FDI in developing countries: Does return of capital dominate return on capital?

Previously reported effects of institutional quality and political risks on foreign direct investment (FDI) are mixed and, therefore, difficult to interpret. We present empirical evidence suggesting a relatively clear, statistically robust, and intuitive characterization. Institutional factors that affect the likelihood of an abrupt and total loss of foreigners’ capital (i.e., return of capital) dominate factors that affect rates of return conditional on a strictly positive terminal investment value (i.e., return on capital). The evidence is consistent with the hypothesis that expropriation risk is most important among the available measures of different dimensions of institutional quality. A one-standard-deviation reduction in expropriation risk is associated with a 72% increase in FDI, which is substantially larger than the effects of any other dimensions of institutional quality as simultaneously estimated in our empirical models of expected FDI inflows. We show that this evidence is consistent with the predictions of a standard theory of FDI under imperfect contract enforcement and multiple dimensions of political risk.

Myanmar's Attractiveness for Investment in the Energy Sector: A Comparative International Perspective

Myanmar’s needs: Myanmar is severely affected by energy poverty, and needs to invest a greater share of GDP in the energy sector than any other country in Asia. It is estimated to require a total of USD 650 billion by 2030 to satisfy its growing demand for energy – USD 170 billion from foreign investors and the remainder from domestic sources. Investment is needed in both the petroleum and renewable energy sectors. Due to lack of capital, technology and know how in Myanmar, much of the necessary investment will have to come from abroad. However, the World Bank ranks Myanmar’s general investment climate as only 167th out of 189 countries. This report examines the strengths and weaknesses of Myanmar’s business climate in the petroleum and renewable energy sectors: how it compares with other countries, especially in ASEAN; what matters to foreign investors; and how this situation can be improved. Not resting on one’s (new) laurels: The recent international interest in Myanmar may prove counterproductive for the country’s investment climate, if this upsurge in interest induces the government to slow down in its reform efforts. When the novelty of Myanmar wears off, that may become a problem. Indeed, possible signs of such a slowdown can be observed already. According to official data, FDI in Myanmar decreased significantly in the first four months of 2016 compared to the same period in 2015. Investors were increasingly cautious and worried about the slow pace of reform, delays in establishing a panel to approve new investment projects and the lack of clarity on the country’s new economic development strategy (DVB, 2016). This highlights the importance of working constantly to improve the investment climate and staying in close contact with investors, keeping them informed about developments. Challenges common to the petroleum and renewables sectors: Lack of data and information for market entry; fragmented institutional and regulatory framework; low levels of electricity access and digitalization; low international oil prices. Challenges in the petroleum sector: Limited supply-industry infrastructure and lack of local engineers; MOGE petroleum sector monopolization and conflicts of interest; limited geological data; complicated taxation; weak government–business communication; challenges in finding local partners; time-consuming licensing procedures; paper-based communication and lack of e-government; production-sharing agreements biased towards participation of large oil companies, excluding smaller ones; frequent changes in legislation; closed downstream market. Challenges in the renewable energy sector: No national target or legislation on renewable energy; no dedicated public agency regulating the sector; lack of business associations; subsidies for grid electricity generated from fossil fuels disadvantage off-grid renewables; access to suitable land; complex mountainous terrain and protected areas as well as political instability in these areas; underdeveloped grid system for large-scale production; lack of data on the renewable-energy resource potential; limited infrastructure for technical support and maintenance; high cost of installing solar panels and wind turbines; disintegrated biofuel production and supply markets; lack of local specialists; no taxation system for renewables; security risks in conflict-prone Kachin, Rakhine and Shan states. Opportunities in the petroleum and renewable energy sectors: Government commitment to reform; advantageous location as part of the Greater Mekong Subregion and ASEAN, close to the Chinese and Indian markets; significant resource base, especially natural gas, hydropower and bioenergy; rapidly rising energy demand in Myanmar and neighbouring countries; high demand for investment in refineries, oil terminals, oil barges and petrol stations; opportunities in retail business; new petroleum and renewable energy laws are underway; abundant semi-skilled labour, and low cost of unskilled labour; low levels of corruption and criminality. Initially, companies may perceive the business climate as unpredictable, but, having entered the market, and having learned and adapted to local conditions, companies experience greater predictability. Opportunities in the petroleum sector: Relatively transparent tender system; equal treatment of investors; government experience and capacity; market maturity. Myanmar’s strategic location, with rapidly rising energy demand among hundreds of millions of people in the neighbouring countries and low transportation costs (especially for gas delivery to China, India and Thailand), represents an opportunity to foreign investors. Opportunities in the renewable energy sector: Latecomer advantage; low level of electrification increases cost advantage of off-grid electrification; support from international donors; strong civil society actors are promoting renewable energy development.

Terminal investment timing decisions in a competitive setting with uncertainty using a real option approach

ABSTRACTThis paper uses a real option approach to analyze terminal investment timing decisions for situations in which a port faces competition from its rivals in an uncertain market. We propose a network model to describe carriers’ cargo routing decisions and competition among rival ports. We then transform this model into a multicommodity flow problem and use the column generation algorithm to solve it. After obtaining a port’s possible future annual revenues and the potential net present value (NPV) for its terminal construction project through the network model, we adopt the expanded NPV rule and transform the investment timing decision into an optimal stopping problem. A least squares Monte Carlo simulation algorithm is proposed to find the investing probabilities for future years. The proposed models are applied to a steel cargo terminal investment case in the Port of Bengbu in Anhui province of China. The impacts on the investing probability and the expanded NPV of changes in the demand volatility, the initial investment and the port discharging rate are analyzed to provide managerial insights for port managers.

Internalization of port congestion: strategic effect behind shipping line delays and implications for terminal charges and investment

ABSTRACTThis paper develops a theoretical model to analyze the congestion internalization of the shipping lines, taking into account the ‘knock on’ effect (i.e. the congestion delay passed on from one port-of-call to the next port-of-call). We find that with the presence of the knock-on effect, liners will operate less in terminals, and an increase of a liner’s operation in one terminal will decrease its operation in the other. If the liners are involved in a Stackelberg competition, whether they operate more or less in a terminal under the knock-on effect depends on the comparison between the marginal congestion costs of terminals. Furthermore, we find that the coordinated profit-maximizing terminal charges are higher than both the socially optimal terminal charges and the independent profit-maximizing terminal charges. When the knock-on effect is small, the independent profit-maximizing terminal charges are set at higher levels than the socially optimal terminal charges; but when the knock-on effect is sufficiently large, this relationship may reverse. Besides, the capacity investment rules are the same for welfare-maximizing terminal operator and coordinated profit-maximizing terminal operator, while independent profit-maximizing terminal operators invest less in capacity. The larger the knock-on effect, the larger this discrepancy.

Internalization of Port Congestion: Strategic Effect Behind Shipping Line Delays and Implications for Terminal Charges and Investment

ABSTRACTThis paper develops a theoretical model to analyze the congestion internalization of the shipping lines, taking into account the ‘knock on’ effect (i.e. the congestion delay passed on from one port-of-call to the next port-of-call). We find that with the presence of the knock-on effect, liners will operate less in terminals, and an increase of a liner’s operation in one terminal will decrease its operation in the other. If the liners are involved in a Stackelberg competition, whether they operate more or less in a terminal under the knock-on effect depends on the comparison between the marginal congestion costs of terminals. Furthermore, we find that the coordinated profit-maximizing terminal charges are higher than both the socially optimal terminal charges and the independent profit-maximizing terminal charges. When the knock-on effect is small, the independent profit-maximizing terminal charges are set at higher levels than the socially optimal terminal charges; but when the knock-on effect is ...

Socially cued developmental plasticity in web-building spiders.

BackgroundSocially cued anticipatory plasticity (SCAP) has been proposed as a widespread mechanism of adaptive life-history shifts in semelparous species with extreme male mating investment. Such mating systems evolved several times independently in spiders and male reproductive success should critically depend on timely maturation and rapid location of a receptive and, ideally, virgin female. We experimentally investigated socially cued anticipatory plasticity in two sympatric, closely related Nephila species that share many components of their mating systems, but differ in the degree to which male reproductive success depends on mating with virgin females. Juveniles of both species were reared either in the presence or absence of virgin female silk cues. We predicted strong selection on socially cued plasticity in N. fenestrata in which males follow a highly specialized terminal investment strategy, but expected a weaker plastic response in N. senegalensis in which males lost the ability to monopolize females.ResultsContrary to our predictions, N. fenestrata males presented with virgin female silk cues did not mature earlier than siblings reared isolated from such cues. Males in N. senegalensis, however, showed a significant response to female cues and matured several days earlier than control males. Plastic adjustment of maturation had no effect on male size.ConclusionsOur results indicate that a strong benefit of mating with virgins due to first male sperm priority does not necessarily promote socially cued anticipatory plasticity. We emphasize the bidirectional mode of developmental responses and suggest that this form of plasticity may not only yield benefits through accelerated maturation, but also by avoiding costs of precipitate maturation in the absence of female cues.

Influence of predator cues on terminal investment in courtship by maleSchizocosa ocreata(Hentz, 1844) wolf spiders (Araneae: Lycosidae)

Abstract Sexual signals play a critical role in mate attraction, but fitness benefits of signal production depend on a number of external and internal influences. Sexual signaling can be energetically expensive, and has potential to attract unwanted attention from predators. Male brushlegged wolf spiders, Schizocosa ocreata (Hentz, 1844) (Araneae: Lycosidae), actively signal to females in the leaf litter habitat during their spring breeding season, but face a tradeoff between current and future reproduction as the season progresses. The terminal investment hypothesis predicts that with fewer available females, increasing risk of predation, and stronger influence of senescence as the season progresses, males should take greater risks to secure mating. We explored this idea by exposing males of increasing ages to female cues alone or female cues combined with predator cues. We found little or no direct evidence to support the terminal investment hypothesis in this species, in that males across all ages esse...

Amphibians with infectious disease increase their reproductive effort: evidence for the terminal investment hypothesis.

Mounting an immune response to fight disease is costly for an organism and can reduce investment in another life-history trait, such as reproduction. The terminal investment hypothesis predicts that an organism will increase reproductive effort when threatened by disease. The reproductive fitness of amphibians infected with the deadly fungal pathogen Batrachochytrium dendrobatidis (Bd) is largely unknown. In this study, we explored gametogenesis in two endangered and susceptible frog species, Pseudophryne corroboree and Litoria verreauxii alpina. Gametogenesis, both oogenesis and spermatogenesis, increased when animals were experimentally infected with Bd. In P. corroboree, infected males have thicker germinal epithelium, and a larger proportion of spermatocytes. In L. v. alpina, infected males had more spermatic cell bundles in total, and a larger proportion of spermatozoa bundles. In female L. v. alpina, ovaries and oviducts were larger in infected animals, and there were more cells present within the ovaries. Terminal investment has consequences for the evolution of disease resistance in declining species. If infected animals are increasing reproductive efforts and producing more offspring before succumbing to disease, it is possible that population-level selection for disease resistance will be minimized.

Older conservatives: reproduction in female Alpine chamois (Rupicapra rupicapra) is increasingly risk-averse with age

In long-lived mammals, costs of reproduction may vary with age. The terminal investment hypothesis predicts greater reproductive effort as females approach the end of their life expectancy. We monitored 97 individually marked female Alpine chamois (Rupicapra rupicapra (L., 1758)) between 2007 and 2013 to determine how age-specific reproduction affected body mass and subsequent reproductive success. We captured and weighed females between April and August and monitored reproductive success from April to October through mother–kid associations. Reproductive success was strongly age-dependent and peaked at 70% for prime-aged females (4–7 years). Reproductive senescence began at 8 years, earlier than reported by other studies of ungulates. There was no clear evidence of reproductive costs in any age class. Reproductive success was very heterogeneous for old females, suggesting variability in the onset of senescence. Old females were less likely to reproduce in poor years despite being heavier than prime-aged females, suggesting reproductive restraint in late life rather than terminal investment. Female mass remained stable from May to August with no effect of lactation. Our results suggest that chamois reproductive strategy becomes increasingly conservative with age, resulting in no detectable costs of reproduction.

Robust Pricing of Fixed Income Securities

We analyze a dynamic investment problem with interest rate risk and ambiguity. After deriving the optimal terminal wealth and investment policy, we expand our model into a robust general equilibrium model and calibrate it to U.S. data. We confirm the bond premium puzzle, i.e., we need an unreasonably high relative risk-aversion parameter to explain excess returns on long-term bonds. Our model with robust investors reduces this risk-aversion parameter substantially: a relative risk aversion of less than four suffices to match market data. Additionally we provide a novel formulation of robust dynamic investment problems together with an alternative solution technique: the robust version of the martingale method.

Context‐ and State‐Dependent Male Mate Choice in a Sexually Cannibalistic Spider

AbstractHigh male mating investment may favor selection on male mate choice particularly if females vary in quality. Terminal investment strategies constitute a maximal mating effort and have evolved independently in the absence of paternal investment in several spider taxa including the genus Argiope. To test for male mate preferences in the above context, we used the sexually cannibalistic spider A. bruennichi. We varied male state (mating status and post‐maturation age) as well as the competitive context and quantified male mate choice decisions between females of different states and developmental stages in binary choice tests. We found an overall adaptive preference for the virgin against the mated female regardless of male mating state. Furthermore, we demonstrated that older males paid more attention to female fecundity‐related traits than to mating status. In a second set of experiments, we offered males a choice between a virgin and a subadult female and varied the competitive context which had no effect on male decisions. Curiously, a preference for the virgin adult female was only apparent after exclusion of females that matured <3 d prior to the test. Repeated tests of males supported the hypothesis that males do not distinguish between a freshly matured virgin female and a subadult female. Our results show that male spiders execute mate choice based on information collected from female silk strands and that they integrate their own state into mating decisions.

Airport congestion pricing and terminal investment: Effects of terminal congestion, passenger types, and concessions

None of the airport-pricing studies have differentiated the congestion incurred in the terminals from the congestion incurred on the runways. This paper models and connects the two kinds of congestion in one joint model. This is done by adopting a deterministic bottleneck model for the terminal to describe passengers’ behavior, and a simpler static congestion model for the runway. We find that different from the results obtained in the literature, uniform airfare does not yield the first-best outcome when terminal congestion is explicitly taken into account. In particular, business passengers are at first-best charged a higher fare than leisure passengers if and only if their relative schedule-delay cost is higher. We further identify circumstances under which passengers are, given a uniform airport charge scheme, under- or over-charged with respect to the terminal charge. Furthermore, when concession surplus is added to the analysis, the airport may raise (rather than reduce) the airport charge in order to induce more business passengers who in turn will lengthen leisure passengers’ dwell time and hence increase their chance of purchasing concession goods. Finally, the impacts of terminal capacity expansion and time-varying terminal fine toll are discussed.

No Evidence of Terminal Investment in the Gray Treefrog (Hyla versicolor): Older Males Do Not Signal at Greater Effort

Current models indicate that life history trade-offs between current and future reproduction can have a major influence on sexual signaling. Individuals with fewer future reproductive opportunities—regardless of current effort—are expected to allocate greater resources to current reproductive effort (terminal investment) because of the low marginal survival cost to signaling. In this study we examined the effect of age and physical condition on the calling behavior of the Gray Treefrog (Hyla versicolor) to test the prediction that older males should exhibit greater signaling efforts compared to younger males of similar condition. Contrary to our predictions, calling males showed no significant effect of age or condition on any of the three call properties measured (call length, call rate, call effort). We offer possible explanations for the apparent discrepancy between theoretical predictions and our observations from the field.

Terminal investment in the gustatory appeal of nuptial food gifts in crickets.

Investment in current versus future reproduction represents a prominent trade-off in life-history theory and is likely dependent on an individual's life expectancy. The terminal investment hypothesis posits that a reduction in residual reproductive value (i.e. potential for future offspring) will result in increased investment in current reproduction. We tested the hypothesis that male decorated crickets (Gryllodes sigillatus), when cued to their impending mortality, should increase their reproductive effort by altering the composition of their nuptial food gifts (i.e. spermatophylaxes) to increase their gustatory appeal to females. Using a repeated-measures design, we analysed the amino acid composition of spermatophylaxes derived from males both before and after injection of either a saline control or a solution of heat-killed bacteria. The latter, although nonpathogenic, represents an immune challenge that may signal an impending survival threat. One principal component explaining amino acid variation in spermatophylaxes, characterized by a high loading to histidine, was significantly lower in immune-challenged versus control males. The relevance of this difference for the gustatory appeal of gifts to females was assessed by mapping spermatophylax composition onto a fitness surface derived in an earlier study identifying the amino acid composition of spermatophylaxes preferred by females. We found that immune-challenged males maintained the level of attractiveness of their gifts post-treatment, whereas control males produced significantly less attractive gifts post-injection. These results are consistent with the hypothesis that cues of a survival-threatening infection stimulate terminal investment in male decorated crickets with respect to the gustatory appeal of their nuptial food gifts.

Effects of immune challenge on the oviposition strategy of a noctuid moth

Infections can have detrimental effects on the fitness of an animal. Reproducing females may therefore be sensitive to cues of infection and be able to adaptively change their oviposition strategy in the face of infection. As one possibility, females could make a terminal investment and shift reproductive effort from future to current reproduction as life expectancy decreases. We hypothesized that females of the noctuid moth Heliothis virescens make a terminal investment and adapt their oviposition timing as well as their oviposition site selectivity in response to an immune challenge. We indeed found that females that were challenged with the bacterial entomopathogen Serratia entomophila laid more eggs than control females one night after the challenge. Additionally, bacteria-challenged females were less discriminating between oviposition sites than control females. Whereas control females preferred undamaged over damaged plants, immune-challenged females did not differentiate between the two. These results indicate that terminal investment is part of the life history of H.virescens females. Moreover, our results suggest that the strategy of terminal investment in H.virescens oviposition represents a fitness trade-off for females: in the face of infection, an increase in oviposition rate enhances female fitness, whereas low oviposition site selectivity reduces female fitness.

Effect of immune challenge on aggressive behaviour: how to fight two battles at once

Animals are attacked by pathogens, predators and competitors, sometimes simultaneously. For example, male crickets fight each other for access to females and such challenges may occur when one or both males are also defending themselves against a pathogen. We tested whether males altered their aggressive motivation when faced with both a competitor and a pathogen simultaneously. We found that immune-challenged male crickets (Gryllus texensis) were more likely to defeat male competitors when the reproductive payoff (i.e. a female) was nearby. However, when females were not present, males showed a decrease in their aggressive behaviour, and were less likely to win encounters with control males. This plasticity of aggressive motivation did not occur when males were chronically immune challenged. Chronically immune-challenged males were more likely to be defeated by control males regardless of the presence of a female. These results suggest that the costs associated with a chronic immune challenge may prevent terminal reproductive investment. We show that males can benefit from terminal reproductive investment because acutely immune-challenged males were still capable of mating and females did not appear to discriminate against them. Male crickets appear to engage in a context-dependent trade-off between the ability to defeat pathogens and the ability to defeat competitors. This trade-off is mediated, in part, by changes in male aggressive motivation (i.e. the critical threshold for the decision to flee).

On Sunk Costs and Escalation

The sunk cost effect is demonstrated when a past investment of time, money, or effort increases the likelihood of further investment. Escalation is the tendency to continue investment despite negative consequences. Although some researchers have defined the sunk cost effect as a subset of escalation, others use the terms interchangeably and only examine one of the two phenomena. In order to further clarify the relation between escalation and the sunk cost effect, the current study used a novel experimental analog wherein participants made an initial forced investment ($5, $20, $35; randomized) before choosing to pay to complete the project ($5, $20, $50, $80, $95; randomized), or to begin a new project (free). There was a systematic positive relation between initial investment price and the proportion of choices to complete the project at the highest terminal investment ($95) for those who committed the sunk cost effect. Moreover, 54 % of participants exhibited an overall sunk cost effect whereas 87 % of participants completed projects even when the additional investment was higher than the expected average of completing a new trial (>$70), demonstrating escalation. These two effects were differentially impacted by the amount of the further investment, functionally differentiating the sunk cost effect from escalation.

Immune activation generates corticosterone-mediated terminal reproductive investment in a wild bird.

Despite classical expectations of a trade-off between immune activity and reproduction, an emergent view suggests that individuals experiencing activation of their immune system actually increase reproductive effort and allocation to offspring as a form of terminal investment in response to reduced survival probability. However, the components and mechanisms of increased parental investment following immunostimulation are currently unknown. We hypothesize that increased glucocorticoid production following immunostimulation modulates the increase in reproductive effort that constitutes terminal investment. We activated the immune system of breeding female house wrens (Troglodytes aedon) with an immunogen and cross-fostered the eggs that they subsequently produced to separate prenatal and postnatal components of maternal investment. Cross-fostering revealed an increase in both pre- and postnatal allocation from immunostimulated females, which was confirmed by quantification of egg constituents and maternal provisioning behavior. The increase in maternal provisioning was mediated, at least in part, by increased corticosterone in these females. Offspring immune responsiveness was also enhanced through transgenerational immune priming via the egg. Thus, our results indicate that maternal immunostimulation induces transgenerational effects on offspring through both pre- and postnatal parental effects and support an important role for corticosterone in mediating parental investment.

Resource availability as a proxy for terminal investment in a beetle

Terminal investment hypothesis is a longstanding theoretical idea that organisms should increase their reproductive effort as their prospects for survival and reproduction decline. However, numerous attempts to test the terminal investment in reproduction have yielded contradictory results. This study reports an experimental confirmation of the terminal investment hypothesis. It was predicted that immune-challenged yellow mealworm beetles (Tenebrio molitor) are more likely to follow terminal investment strategy when their food resources are limited. Our results suggest the key role of food resources while making decisions to follow a terminal investment strategy. We found that male individuals invested in their sexual attractiveness at the expense of immune response and survival when food was not available. In contrast, the beetles did not decrease their lifespan and did not invest in the attractiveness of their sex odours under conditions of food ad libitum. Our results show the importance of food availability and quality in understanding the evolution of reproductive strategies.