Time Invariant Decision Rules and Land Development: A Dynamic and Stochastic Analysis

14 Pages Posted: 13 Jun 2003

See all articles by Amitrajeet A. Batabyal

Amitrajeet A. Batabyal

Rochester Institute of Technology (RIT) - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: 2003

Abstract

The Arrow-Fisher-Henry (AFH) analysis of land development under uncertainty has been conducted in a two period model. In contemporary times, Capozza and Helsley (1990), Batabyal (1996, 1997, 2000), and others have analyzed the question of land development under uncertainty in a multi-period setting. We extend aspects of this literature by examining the role that bid values play in the decision to develop land over time and under uncertainty. We first delineate a simple decision rule for a landowner who wishes to obtain, at the very least, a minimal level of revenue from land development. Next, we compute the expected value of the bid that results in land development when this decision rule is followed by the landowner.

Keywords: Bid, Dynamics, Land Development, Reservation Price, Uncertainty

JEL Classification: Q24, R19, D81

Suggested Citation

Batabyal, Amitrajeet A., Time Invariant Decision Rules and Land Development: A Dynamic and Stochastic Analysis (2003). Available at SSRN: https://ssrn.com/abstract=416604 or http://dx.doi.org/10.2139/ssrn.416604

Amitrajeet A. Batabyal (Contact Author)

Rochester Institute of Technology (RIT) - Department of Economics ( email )

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